How the Debt Collection Process Works
Debt collection has become a standardized piece of how the financial system works in the United States. This is a process in which companies attempt to recoup money they’re believe they’re owed from consumers who haven’t paid their bills.
There are a few things that stand out about the debt collection process. The first of these things is how common it is among the broader population. It’s estimated that about a third of individuals with a credit report had debt in collection in 2016. The fact so many people are behind on their bills to the degree that the debt requires it be sent to collection is a sobering statistic. It shows that having debt in collection isn’t just an issue with someone personally, but more so a problem embedded within society as a whole.
While it’s not difficult to pontificate and wax poetic about the ills of debt in our world today, doing this doesn’t really affect one’s position. In order to navigate the world of debt collection, it’s important to know how the debt collection process works.
How the Debt Collection Process Works
The debt collection process isn’t entirely defined by exact parameters. While there are laws at the federal and state level that determine what is and isn’t allowed by debt collection companies, the process itself lacks complete standardization.
While you can’t say for certain how and when debt collection will begin, it’s possible to apply certain sets of generalities. As already mentioned, debt collection is a process that begins when a company believes you haven’t repaid a debt owed to them. When this is the situation, they’re going to make an effort to recoup part or all of that money through whatever methods are legally available to them.
Some organizations will have in-house debt collection farcicalities, which deal specifically with recapturing losses incurred from unpaid loans. Most, though, will sell the debts to a debt collection agency, which will then use its own set of tactics to extract as much payment from the consumer as possible.
Debt collection agencies are able to profit from buying these debts from other companies by only paying pennies on the dollar versus the original loan amount. Once they’ve purchased a delinquent loan, they just have to recover more than the amount they paid in order to make a profit. When they’re able to recover close to the full amount, they can make several times the amount they paid to take over the loan.
Ways to Get Out of Debt to Avoid Debt Collectors
If you’re struggling to pay your debts and are starting to get calls from debt collectors, you need to act in order to remedy the situation. This problem isn’t going to go away on its own. Those who want to settle their debts can find more information at www.freedomdebtrelief.com. While debt relief isn’t the right option for all consumers, it can be a huge help to those who have already exhausted their other options.
It’s important you don’t give up on fighting to beat your debt, even if you’re overwhelmed by debt collection. Debt collectors are ruthless, and won’t stop pursuing you util they’ve gotten what they want or feel it’s no longer financially viable for them. Simply ignoring debt collection isn’t going to make it go away. In fact, it might lead to court ruling against you. This can lead to things like wage garnishment, or even having funds taken directly from your bank account.
Working through debt collection is a trying process for consumers. No matter where you are in life or how much you owe, there’s nothing enjoyable about dealing with debt collectors. Understanding the debt collection process, however, can help you get your life back on track sooner.
