A debt collector is assigned by an agency, law firm, or a company for recovering lent money. The entire debt collection process begins when there is a missed payment on a credit card or a loan that needs to be repaid.
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When it comes to Bank Loans and Credit Cards, the debtor only has about 30 days from the bill’s due date to repay the money. Otherwise, it is reported to the credit bureaus.
During this time, the creditor tried to contact the debtor by:
- Personal visits
- Phone
- Leaving voice mails
- Formal letters
Time-Limit for the Debtor
The best strategy is to pay this debt within the period of these thirty days. If the debtor finds it hard to deliver within this time, his situation can be discussed with the creditor, where solutions are found by formulating a new repayment plan.
After 30 days have passed, the debt is transferred to another department of the same company specializing in retrieving that debt. This is where the debt collectors are involved in making a secured debt recovery. The debt collector can approach the debtor and can also report his credit card to the credit bureau.
If the money has not been paid within thirty days, the credit card is shut down as per the bank’s policy. The credit card account is also shut off. After 180 days have passed, the creditor contracts the debt and writes it off the books.
It is then sold to a debt collection agency. The creditor can contract or sell the debt any time before the 180 days have passed. It is best if one acts sooner.
Debt Collectors and the recovery process
Once a debt has been handed over to the collection agency, it is done in the hopes of secured debt recovery. The creditor sends the claim information as well as the supporting documents to the debt collector.
The claim is then reviewed, analyzed, and accepted by the agency’s debt collection service. The recovery process is started, and it begins with a demand letter being issued to the debtor.
At the same time, an acknowledgment letter is sent to the creditor who has enlisted the collection services.
For a secured debt recovery, the following steps are undertaken:
- The debtor is contacted via telephone calls. This is done to make sure he realizes the payments.
- If the debtor refuses to pay back the debtor doesn’t respond favorably, the debt collection services department updates the client with details on forwarding that claim to the associated attorneys.
- A forwarded claim is signed by clients and sent to the debt collector associated with the case.
- A debtor is notified via emails, telephone, voicemail, and formal letters if solicitors recommend legal action.
- The lawsuit is prepared by a debt collector in coalition with an attorney.
- If a client is hesitant to initiate a legal claim, an extension of 60 days is given to the client before the debt collection services are closed.
- When the debtor replies during this time, discovery is started, and a trial date is set.
- A default judgment is filed by attorneys when the debtor does not reply
- A Writ of attachment is filed if the judgment is awarded in favor of the client.
- Now, the assets of the debtor are located like wage garnishments, bank levies, and liens, etc.
What can be done when a debt collector sues?
If you have been served with a debt collection lawsuit and summoned to the court, the only way now forward is to stop ignoring the problem at hand. If you fail to reply or appear physically to the court, the judge will default against you.
You can now expect an arbitration or a conference leading to the settlement before the trial is begun. This is your last opportunity to sit with the debt collection agency and bring them to an agreement point to avoid a problem and the legal fee of the case.
A summary judgment can be pursued if all the stated facts are correct, and you can win without trial. Most of the cases can proceed towards a settlement or can end up in a summary judgment.
A consumer lawyer can be hired if you are facing a trial. The trial can be expected if both sides provide the truth and then leave it to the judge to decide.
Summing it up
A debt collector can quickly recover debt when a debt collection agency is involved in the process. The debtor is issued warnings, and if the debtor shows up for a discussion, many possibilities are laid in front of him.
By following a company’s policy and moving towards litigation, the debt can be recovered easily and quickly by blocking the credit card and imposing wage garnishments as per the decided rate by the court.