If you have been contacted by a debt collector or worried that a collector will contact you soon because you have fallen behind your bill payments, you probably have many questions and might be nervous about the process.
This article will introduce you to how debt collection works so you can understand the perspective of a collector or an agency. This will give you a better idea of what motivates debt collectors and what are the incentives they get.
How Does Debt Collection Work?
Debt collectors often work for debt collection agencies, though some operate independently and many are also attorneys. Agencies act as a middleman that tries to collect debts from the customers that are at least 60 days past due. The creditor pays the collector a percentage of the total amount collected. These agencies collect delinquent debts of all types: credit cards, personal loans, medical, student loans, cell phones, and utility bills and more.
For difficult to collect debts, some agencies also negotiate settlements with a customer for less than the amount owed. Debt collectors also use aid from lawyers to file lawsuits against customers who have refused to pay the debt.
What Debt Collectors Do
A debt collector can use letters, phone calls, or sometimes e-mails to contact the borrower and try to convince them to repay the borrowed amount. When the collector is not able to reach the customer, they look further and try to find other means of contact by using computer software and private investigators. They also conduct searches on the assets owned by the borrower such as bank accounts to determine the debtors repaying ability. Debt collectors may also report the debts to credit bureaus to encourage consumers to pay since debts can do serious damage to a customer’s credit score, which could affect their ability to take any loans in the future.
A debt collector has to rely on the debtor to repay. They cannot seize a pay check or reach into a bank account unless a judgment is obtained from a court. To do this, a collection agency must take the debtor to court before the statute of limitations run out and win a judgment against them. This judgment allows a collector to begin garnishing wages and bank accounts, but the collector must still contact the debtor employer and the bank to request the money.
Debt collectors also contact the borrowers who already had a judgment against them. Even when a creditor wins, it can be difficult to collect the money. Along with levies on their bank accounts or vehicle, debt collectors can also try to place a lien on the property of force the sale of the assets to collect the borrowed amount.
Now, that you are aware of how the debt collectors operate, you should feel more encouraged to pay any debts on time before a Debt Collection Netherlands agency contact you.