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Andy Masaki On 25th Apr,17
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Debt in collections can be troublesome. Your phone will never stop ringing, and the debt collector won’t stop asking you for money. In short, you can’t breathe freely unless you pay off your debts.

Who is a debt collector?

Under the Fair Debt Collection Practices Act (FDCPA), a debt collector is a person who collects debt on behalf of a creditor or a lender, usually when the debt is past-due.

A debt collector can be a collection agency or a lawyer who is appointed by the creditors or the lenders to collect debts that are past-due.

The creditor or lender also has the right to sell your debt to a debt collection agency if you’re 6 or more months delinquent on it. The collection agency then contacts you to collect the debt.

Debt collectors are also known as debt buyers, debt collection agencies, or debt collection companies. They do this in exchange for some fees.

When your debt is sent to collections

Your bills will be sent to the collections if you avoid the creditor’s phone calls and letters, and you are unable to pay off the debt amount in spite of working out a repayment plan. You’ll find your bills in the collections within 3 to 6 months after you default.

Your credit card debts, medical bills, mortgage payments, car payments, student loans, and utility bills go to collections most often.

What will you expect when your debt is sent to collections?

1. Expect your phone to ring a million times

If your account goes into collections, you’ll be contacted by the debt collectors several times. But, they can’t call you anytime, anywhere. Under the Federal Trade Commission’s (FTC) Fair Debt Collection Practices Act (FDCPA), consumers are protected from the harassing collection calls.

2. Your debts may be assigned or sold

When your debts are assigned, it means your creditor still owns the debts but hands over them to a collection agency with a contract to collect. On the other side, your debts may be sold if the creditor sells the debts to a debt collection agency.

3. The collection agency follows the creditor if the debt is assigned

If the original creditor still owns your debt, the collection agency is bound to listen to what the creditors says. Without the original creditor’s consent, the collection agency cannot sue you in the court for not paying the debt. Or, if the original creditor asks for a full payment of the debt, the collection agency has to get the full amount from you.

4. Bill collection is a profitable business

Expect your bills in collections when you’re 3 to 6 months delinquent on your payments. It’s because bill collecting is a money-making business, where the collection agencies or agents are paid for collecting your debts.

5. Debt collection agencies with assigned debts charge between 25% to 60% of what they collect

Sometimes, the debt collectors or the collection agencies charge money per phone call they make or letters they write - that is usually 50¢ per letter or $1 per call.

Remember, the older the account, the higher will be the agency’s fees.

What will you do with your account in collections?

You can respond to your account in collections in many ways. Just have a look below:

  • Within five days of contacting you if the debt collector or the collection agency doesn't provide you a written validation of your debt, then you can send them a letter requesting a validation or verification of your debt (that is a debt validation letter).

    Know more: 5 Debt validation steps to combat collection agency

  • If you think that the debt isn’t yours, then take action immediately. Within 30 days after the first collection activity, you can write a letter to the collection agency stating that the debt is not yours, and they should stop the collection activity until they can provide solid proof that you owe the debt.

    If you don’t agree with the proof provided by the collection agency, then file a complaint to the Consumer Financial Protection Bureau (CFPB).

  • If you believe that the information provided by the collection agency is accurate, make an attempt to negotiate and settle the debt with the collection agency.
  • Try to be cautious while communicating with the collection agency. You’ll get protection from legal action if your statute of limitations (SOL) period expires. The statute of limitations varies from state to state.

    In some states, your statute gets reset even if you admit the debt on the phone.

Last Updated on: Tue, 25 Apr 2017

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