Frequently Asked Questions about debt collection
You have a lot of questions. We’re here to answer them. Here are some “Frequently Asked Questions” about debt collection. If you have a question that is not covered here, please feel free to contact us and we will try our best to answer it.
Do collectors force people into Bankruptcy?
In reality, it would not make sense for a collector to encourage a consumer to file for Bankruptcy. When people file for Bankruptcy, their financial obligations to their creditors are usually dissolved, leaving the creditor to receive very little or nothing. A collectors job is to collect, but often it also includes counseling. Most accounts are referred for collection because they have gone unpaid for several months. Without the quick actions of collection services, unpaid debt is often reflected by higher consumer prices. Since there is a limit on how high prices can be increased before businesses begin losing customers, bad debt also results in business failure and job loss.
What should I do if I receive a collection notice?
First, stay calm. Just as consumers depend on an income to pay their living expenses, the people who sell goods or services on credit depend on your payment to meet their own expenses. Remember, by the time your account has been turned over to a collection specialist, the creditor has probably carried the account for several months. Second, work with the collection agency to resolve the problem before it gets worse.
Why are accounts referred for collection?
Most accounts are referred for collection because they have gone unpaid for several months and the creditor has not received communication from the consumer. Third-party collection services, which use specialized phone systems, computers and software designed specifically for the collection industry, often are more effective than creditors at collecting payment on such delinquent accounts.
What does a typical professional collection office do?
Often creditors cannot locate consumers who have moved or changed their phone numbers. The first thing a collection service must do is obtain the consumer’s current address or phone number through a process called skiptracing. The collection office then sends the consumer a notice that allows him or her to dispute the validity of the debt and/or request verification of the debt. Once the notice is received, a collector may call or write to the consumer and ask for full payment of the debt. If payment in full is not possible, the collector helps the consumer make arrangements to solve the problem.
Is there a typical debtor?
No. People from all walks of life face financial problems. These problems can stem from poor money management and budgeting skills, the loss of a job, prolonged ill health or a multitude of other unforeseen circumstances.
What is the difference between "in-house" collections and third-party collections?
Third-party collectors are directly regulated by the Fair Debt Collection Practices Act (FDCPA), which is administered by the Federal Trade Commission (FTC). The FDCPA sets forth strict guidelines designed to protect consumers from abusive, misleading and unfair debt collection practices. In-house collectors are credit grantors and are covered by the FDCPA only under certain circumstances.
What is a professional third-party debt collection service?
Third-party collection services collect on past-due accounts referred to them by various credit grantors-credit card issuers, banks, car dealers, retail stores, healthcare facilities-any business that extends credit or offers payment installment plans.
Please note that this information is not intended as legal advice and may not be used as legal advice. This information is based on current research on these issues and should not replace the advice of your own legal counsel.