looking for an answer

[vjp46]

was just curios on this when a collection place goes after you dont it cost them money to process this in court like if you owe them 400.00 is it worth it for them to take legal action a friend of mine was asking me and i really did not have a good answer for her so maybe someone knows plus she says its a very old acct like 8 years and its not on her credit reports all three

[HHM]

There is no hard and fast policy, but from a common sense point of view, it is generally not worth a collectors effort to sue over small balances, and few attorney's would bother, because at a minimum, they would have to pay a filing fee.

But, things can get out of hand with interst...so be careful...if an account is left lingering long enough, eventually the compounding interest will make it worth while to pursue. Thus, if the balance owed was $400 eight years ago and the default interest rate was 15%, the balance today would be, if using a simple interest formula, $880.00. If the interest is caclulated using a compounding formula (compounding monthly), the new balance would be $1,318.21. I believe, credit cards compound their interest daily, so you can only imagine what the balance would be by now.

Thus, as the account gets over a $1,000 it becomes a worth while suit target. However, there is still an age problem with the account, it may be outside the statute of limitations and the collector may not have enough info from the original creditor to prove the debt in court (Its quite common that collectors and debt purchasers will not have enough info).

[suprdav2]

something to think about too...........in the fine print on the agreement between you and the creditor, a lot of them now state that if it comes down to going to court, the debtor is responisble for all court/attorneys costs. So, the creditor can sue you for the amount of the debt PLUS their attorneys/court costs as well.

[CRRAVOSA]

Most states have a statue of limitation, which menas they have so many years to go after you or they are barred (there are certain exceptions i.e. student loans) the period of time my be extended if she may any payment on the account. If it is eight years and she has not paid more likely the statue expired and it is doubful that the creditor will come after her and if they do she has some good counerclaims