How Debt Collection Works

December 30, 2011 by  Filed under: Debt 

Debt collection can be quite a scary thing. Sometimes the calls can be rather threatening and harassing, while other debt collectors might appear to be trying to help you with payment options or plans. It is quite often that people do not have the money to pay their minimum payment let alone their balance in full, and this can cause quite a lot of frustration between the harassing phone calls and having to explain that you do not have the money to make your payments.

The first step in collection, once your credit card becomes delinquent, is for the credit card company to use their employees to try and collect the debt. They will generally just call on a regular basis to remind you to make a payment at first, but after several months they will become more aggressive. They will generally offer you some kind of deal such as no interest for a certain time period or eliminating some of your fees, but this is just an effort to get you back to paying your monthly payment. The only deals that they will make will be to their benefit, and if you do not respond they will threaten legal action.

When the collection attempts become unsuccessful they will then mark the account as a charge-off account. This means that the credit card company will consider it a loss, and will begin to proceed with collection in a different manner.

More often then not this is when the account is sold off to another company which then turns around and hires a debt collection agency to try and recoup the funds. These companies only make money if you pay the balance in full. They purchase the account for a fraction of what is owed and everything about that is their profit, so they will want to get out of the account as much money as possible.

The 3rd party debt collectors can be quite scary. They will use any tactics possible in order to try and collect the debt including threatening jail time. The problem is that you really have nothing that you are able to do in order to stop the phone calls which will be coming at any time of day, several times of day, every day of the week.

The government is somewhat helpful in these terms. The Fair Debt Collection Practices Act has an entire list of regulations that are to be followed by the debt collection agencies. Should the agencies not follow the rules than you will be able to file civil suit against them for damages.

If debt collection fails the account will then be turned over to a debt collection attorney. The attorney will then be allowed to take legal action against the person in order to receive repayment for the account. The account holder will not have anyway to deal with the account at this point, but will simply be required to pay how the court regulates.

Melvin R. Singleterry, owner of is a practicing attorney who specializes in Consumer Debt Law and debt reduction. Singleterry, who holds a Bachelor and Master of Arts degrees from Oklahoma State University and a Juris Doctor from The University of Oklahoma, has practiced in both State and Federal Courts.

Singleterry served pro bono as legal counsel for The Albert Schweitzer Society, USA, Inc. He organized and operates Associated Attorneys, LLC., a corporation dedicated to assisting consumers obtain legal counsel for help with negotiation and settlement of their unsecured debts.

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