If you have been contacted by a debt collector or worried that you might be contacted soon because you failed to make timely payments of your bills, you probably have many questions and might be nervous about the whole process.
This article will help you understand how debt collection works so that you can understand the perspective of a collector or a debt collection agency. This will give you a better idea of what motivates debt collectors and what are the incentives they receive.
Process of debt collection
Debt collectors often work for debt collection agencies, though some of them operate independently and many of them are attorneys as well. Agencies are the middleman between the company and the customer that tries to collect a debt that is at least 60 days past due. The creditor pays the collector a percentage of the total amount collected. Agencies collect debts of all types: credit cards, phone bills, medical, loans, and more.
Debts that are hard to collect, some agencies also negotiate settlements with a customer for less than the amount owed. A debt collector also uses help from lawyers to file lawsuits against customers who have refused to make the payment.
What Debt Collectors Do
A debt collector uses letters, phone calls, emails, and more to contact the borrower and tries to convince them to repay the borrowed amount. When the collector is not able to reach the customer, they try to find more information on the customer by using computer software and private investigators. They also conduct research on the assets owned by the borrower such as bank accounts to determine whether the borrower is able to pay the debt or not. Debt collectors can also report to the credit bureaus to encourage the borrower to make the payment 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 borrower to repay. They cannot seize a paycheck or take money from their bank account unless a judgment has been passed by the court. To do this, the agency must take the debtor to the court before the statute of limitations run out and win a judgment against them. This judgment allows a collector to begin collecting the debt from the wages and bank account, but the collector must contact the debtor employer and the bank to request the money. Collectors also need to contact the borrowers who already had a judgment against them, even them it is really difficult to collect the money. Along with levies on their bank accounts or vehicle, the debtor collector can also try to place a lien on the property owned by the debtor.
Now, that you know how debt collectors operate, you should feel more encouraged to pay and clear all your dues on time before a Debt collector in France contacts you.