No one is ever excited to get a call from a debt collection agency. They are the type of call we all dread. Due to the economic climate we are faced with, however, more and more of us are faced with the reality of bills that they cannot afford to pay. Understanding the collection process can help you handle these types of situations with a little piece of mind.
There are two main types of debt collections agencies, first party and third party. First party agencies are the ones to do the initial outreach to the debtor, and can often be a part of the company that owns the original debt. Due to this, they typically have a greater desire to maintain a good customer relationship. First party collection agencies will typically try and work things out with the debtor for a few months before either selling the debt or passing it on to a third party agency.
Third party agencies are debt collection companies that take on the collections process after the first party agencies have proved to be unsuccessful. It is in the best interest of these companies to be able to collect from the debtor, as they do not get to collect their fee if they cannot do so. Third party agencies may correspond with the debtor through multiple types of interactions. The commonplace methods are urgent letters and phone calls. International debt collection can prove more difficult due to the need to work with different languages in their communications. Agencies are sometimes even allowed to contact people connected to the debtor, such as a neighbor or a relative, as long as they do not mention the debt. This is in attempt to locate the debtor, and they are only allowed to ask for their address, home phone number, and workplace.
Defaulted debts can become detrimental blemishes on a person’s credit record, and will usually remain there for few years. This can hurt a person in many ways that may be unforeseen at first. Your credit is looked at for many things such as renting an apartment, buying a new car, or even getting a new job. While it may seem ridiculous that having a poor financial history could hinder you from landing a good job that would be able to pull you out of it, it is an unfortunate reality.
Now you are armed with a basic understanding of the debt collection process. While this is something none of us want to go through, it is sometimes necessary. Obviously getting the situation rectified as soon as possible is most beneficial for all involved. This allows the company that owns the debt to get their cash, and keeps your credit record in tact.
Rapid Recovery Solution is an attorney based collection agency, specializing in consumer and commercial debt collection both nationally and internationally. Contact them for more information and for your FREE quote!. This article, Understanding Debt Collection has free reprint rights.