Car payments, medical bills, credit card obligations - the number of financial commitments can increase with time.
When you don't pay back your money on time or when you flounder on your monthly payments, the debt collectors come into the picture.
Debt collection occurs when debt collectors collect debts from consumers or businesses that are bound to pay or repay money they owe.
Debt collectors include lawyers or collection agencies that collect debts as part of their business.
It is usually easier and cost effective for companies to recruit debt collectors than spend their own time and resources to follow-up on pending payments on delinquent accounts.
If you have not paid a bill on time, a creditor may start a debt collection process.
The bill collector may remind you by sending a letter or by calling you.
Your bill collector is doing this to check if you intend to pay back the money you owe.
Sometimes, they may get in touch with you to offer you a payment plan wherein the owed money can be paid back in smaller amounts.
At times, some creditors may be interested in recovering the entire amount immediately.
All this depends on the agreement that you have with creditor.
After repeated mails and calls if you have not responded, then the bill collectors may get stricter.
Once your debt is 30 to 60 days past due, they may report the matter to any major credit bureau.
This can damage your credit reputation.
Bad credit makes it harder for you to get a loan.
If you haven't paid for 90 days, the creditor will employ a bill collection agency or an in-house affiliate to collect the owed money.
A debt collection agency usually works for a fee.
While all this is part of a debt collector's duty, you should also know that you have certain rights in this process.
The Fair Debt Collection Practices (FDCPA) prohibits debt collectors from using abusive words or practices to collect debt from you.
They are not supposed to discuss the matter with a third party, besides a spouse or lawyer.
A bill collector is not supposed to make any false or misleading statements.
A debt collector cannot capture your property unless they have filed suit against you.
If you face any problems from a debt collector, then you can report the same to your state's Attorney General's office.
To sum up, try paying your pending payments on time.
Knowing your rights helps in easing the stress caused by the challenging situation.