What are the steps a creditor takes to collect a debth?

Question

i owe money to a credit card company and lost my job now i cant pay them back i have no money left after rent and food what can i expect to happen

Answer 1

You need to talk to them and explain your situation. If they don't work work you then start paying it back when you can. They will not do anything except call the heck out of you and then sell it to a collection agency. They collection company will not do anything about it unless it is a very large debt (over 20k). Every client I work with has collections from 10+ years ago and nothing happens to them because it is not worth the cost.

Answer 2

they will bad debt the account and sell it to a collection agency and they will hound the h**l out of you for payment. If they cannot collect then in a few years they may take you to court and get a judgment and at that point a garnishment could proceed

Answer 3

They will keep calling you to make a payment. Eventually they will either write off the account and report it on your credit bureau for 7-10 yrs. They will sell it to another collection agency then if you dont pay that collection agency, they will do the same thing. If they don't take that route, they will file a lawsuit against you and sue you for the debt that you owe.

You should call them and let them know what is going on. The have payment arragements that will lower you interest and payments for up to 12 months until you can get back on your feet. You just have to call them and let them know so that they can help you with payment options. The worst thing you can do is just ignore the calls.

Answer 4

They will start out with "friendly reminders" once you start to fall behind. Then, they we become more aggressive. The ocassional phone call and letter will likely become more frequent and aggressively toned. They may threated to damage your credit (which is already damage once you are 30 days late in paying your bill) or sending your account to a collection agency (who will hound you). They may even threaten to sue you (most don't, but many threaten).

You need to become familiar with the Fair Debt Collection Practices Act (FDCPA) today. I'll add a link to some information in the sources box. The FDCPA is a consumer protection law that prohibits debt collectors from abusing consumers over a debt. It does not cover original creditors, but some states passed laws to cover them (the same site with the FDCPA info has state laws, too). Essentially, debt collectors cannot harass you, abuse use, lie to you or do a number of things (like tell others about your debt or call you at work once they know your employer disapproves of you receiving such calls at work).

When they do call, they will try to get you to tell them everything about your financial situation. Don't fall for this trick. They are trying to paint you into a corner to squeeze what little money you have for rent and food out of you and into their already-bloated bank accounts. Typically, most experts in this area suggest a short "I'm having some financial difficulties right now and am doing my best to meet my obligations" answer and then hanging up the phone.

Often times, after 90 days of consecutive nonpayment, a creditor may offer to settle the account for less than the balance as a compromise. The discount won't usually be large at 90 days (it will typically be larger around 180 days). They may send the offer in a letter, but if they call with this offer just request that they send it in writing (because over the phone it might be a trick).

After 180 days, some creditors will assign your account do a third-party debt collector. These debt collectors are notorious for violating the FDCPA, so be aware of this. You may also want to send a Debt Validation letter to the debt collector and at the bottom of the letter inform them that you may record any phone calls. Then, get a device for recording phone calls (can get them from Radio Shack). I'll include a link to a guide for this because some states require that both parties concent to being taped.

Also, keep all records of contacts from creditors and debt collectors. If they do violate the FDCPA, then that could be used as leverage for you to get your debt partially or completely cancelled.

If the debt collector is unable to collect on the debt, then the original creditor may sell the debt to a debt purchaser. These guys are also notorious for violating the FDCPA, so you will need to send the DV letter with the "I may record phone calls" notice.

Of course, bankruptcy could put an end to debt collection activities. If you don't to file for bankruptcy, then you'll definately need to become very familiar with the FDCPA and your state's rules regarding fair debt collection and whether or not they require debt collectors to be licensed (sometimes a debt collector will try to collect on a debt from a consumer in a state for which the debt collector is not licensed... so if a debt collector calls or sends you a letter and your state required them to be licensed, check with your state to see if they are licensed and, if not, turn them into your state's regulatory authority).

As you can see, now is the time to educate yourself thoroughly about debt collection. Good luck! I hope things work out for you and you are able to get back on your feet soon.