What is Debt Collection Process?

Posted by elanie hodges on October 23rd, 2019

People use their credit cards more than their debit cards when it comes to shopping. This is because you end up buying now and paying later. You don’t have to worry about money while shopping. In fact, on a general, people have somewhere around 3-4 credit cards with them. But when it comes time for payment, they realise that money is short. Unfortunately, credit card companies aren’t lax when it comes to collecting payments. Initially, if you become late on paying for your credit card bills, there will be gentle reminders; however, as you keep on defaulting, the reminders change tone. They are now threatening in nature. The Debt Collection Process can be very intimidating as the debt collectors call you incessantly at all hours, and at all places, including work. This can be quite problematic.

Why should you be worried about it?

Debt collectors contact you through various methods of communication including phone, emails or text message. When you take a loan from a creditor, the creditors use their internal collector to get the money back. however, they can end up outsourcing the same to an outside organisation. This might be a temporary arrangement or a permanent one, depending if the loan has been written off by the original creditor and sold to another debt buyer. This can be an issue, especially if you are filing for bankruptcy.

What are your options for tackling debt collection process?

Though creditors have the right to follow debt collection process to get their dues back. however, there are guidelines that they need to follow mentioned in the Fair Debt Collection Practices Act (FDCPA). These include:

•          They are required to identify the debt collection agency they represent as well as provide the collection agency’s name and address.
•          You should be informed about the creditor’s name as well as the amount you owe them along with how the debt issue can be addressed.
•          In case the debt collector doesn’t provide information in the 1^st communication, they need to provide written information within 5 days of initial contact.

Additionally, the FDCPA prohibits the following activities by debt collectors:

•          Discussing debtor’s debt with family, friends, neighbours or employers.
•          The number and time when they can contact the debtor is limited by FDCPA.
•          Any form of threats including insults, slurs or obscenities are prohibited.
•          Provides option for debtors for avoiding collection agencies.