Banking

What Happens When A Debt Is Sent To Collections?

Olivia Reeve
By Olivia Reeve
contributor

February 15, 2021


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  • No one ever wants to get a call from a debt collection agency. However, if you don’t pay up your debt on time, you may end up having to deal with calls and letters from them soon enough. 

    How Debts End Up In Collections

    When a debt is not paid on time, it will end up in the collection. For instance, if an individual fails to pay up their medical or credit card bill, the company owed can decide to write the debt off as a loss and sell it to a debt collection agency. 

    Before selling off their debt to a debt collection agency, most companies would have tried all their possible best to ensure that the debtor makes payment. It is until a case of severe delinquency is established before most companies finally sell off their debt. So selling debt off to collectors is more of a last resort move for most companies. 

    While there are several definitions of “severely delinquent,” the majority of the time, cases get sold off to a collection agency once payment is not received within 90 to 180 days. Once a debt collection agency takes over, this is usually followed by nonstop notification letters and phone calls. 

    How To Deal With A Debt In Collections 

    Having a debt in collections can be very depressing, especially if you’re in a financial crisis and you have no means of paying it back. Yet, that’s not enough reason for you to make any silly decision. If you make any bad decisions during debt collector, it can worsen your situation. Rather, follow the simple steps explained in the list below:

    Gather Facts Concerning Your Case

    Even as a debtor, you are entitled to debt verification and debt validation letters. Within five days of the first contact, it is mandatory that the debt collector send you a validation letter. Once you get it, take a proper look at it for details concerning the age, debt history, and vital info on who the collector is. Then, make sure to cross-check everything with your records to ensure everything corroborates. If it doesn’t, don’t hesitate to speak out! 

    Know All Your Rights As A Debtor

    Ignorance of the law is not an excuse. No matter how simple or complex any legal suit is, you should know your right concerning them. Therefore; it’s important for you to know the rights of a debtor before becoming one. Although it is never too late to learn about your right as a debtor. 

    As a debtor,  it is important that you don’t allow any collectors to abuse you. They’re not allowed by the law to call you at ungodly hours or threaten you in any form. A lot of states in the US have more rights than offer protections for consumers, rather than service providers. To know more about this, you can browse your state’s law concerning debt in collections. 

    Determine The Best Way To Handle Your Debt

    Some of the common ways with which people deal with debts already in collections are disputing the debt on the ground that it is an error or choosing a payoff method. No matter the kind of option you choose to handle debt in collections, you should never allow your collector to have access to your personal financial account. Once you have agreed on a debt payment plan with your collector, ensure you have signed documents to back this up. That way, you can easily checkmate the collector in case they start acting funny in the future. 

    Importantly, if debt doesn’t belong to you or it has already been paid off, you can dispute it with pieces of evidence to back up your claim. If your collector carries out an investigation on the matter and discovers what you’re claiming is right, you won’t have to make any payment. If you’re wrong, you’ll still have to make the payment and you can also get into more trouble for your actions. 

    Trying to sort out debt in collections can put you through a lot of headaches but you mustn’t let that weigh you down. Having a bad debt is not the end of the world. Once you’re determined to work towards clearing it within the shortest time possible, you will be fine.

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