{"id":352251,"date":"2015-01-21T06:00:36","date_gmt":"2015-01-21T13:00:36","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=352251"},"modified":"2022-03-31T19:00:38","modified_gmt":"2022-04-01T01:00:38","slug":"how-debt-collection-works","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/uncategorized\/how-debt-collection-works\/","title":{"rendered":"How Debt Collection Works"},"content":{"rendered":"

\"howdoesdebtcollectionwork\"<\/h2>\n

How Debt Collection Works<\/strong><\/span><\/h2>\n

You may think you already know how debt collection works, but there is more to it than most people realize. There is a whole netherworld of debt collection that deals with unpaid, unsecured debt that might put you into contact with some very unpleasant, unethical people who will do anything, including violating existing laws in order to collection from you on debts you may have forgotten about and may not even know exist. The Federal Trade Commission (FTC), which protects consumer rights, is charged with enforcing the Fair Debt Collection Practices Act (FDCPA). This act forbids collection agencies from employing unfair, deceptive, or abusive tactics, but some debt collectors still knowingly violate the law in the hopes that they can scare you into paying up. They don\u2019t care about what\u2019s ethical, fair, or legal. They just want the money.<\/p>\n

Things You May Not Know About Debt Collection<\/strong><\/span><\/h2>\n

Did you know that you might have debts you\u2019re not even aware of? Sometimes people can be blindsided by old debts that appear seemingly out of nowhere, debts long forgotten for old utility accounts, medical bills, or anything at all that was paid for with a credit card. What you may not know about credit is that if you have an old debt from a credit card company that has been written off by the original owner of the debt, it can be sold to a debt collection company that you never heard of. However, if the caller or e-mailer will not provide a personal name, a company name, a street address, or valid phone number, the odds are, this contact about a so-called debt, is not legitimate, so you should not pay it. Make notes about what the caller says, or print off their e-mail and contact your state Attorney General\u2019s office, or the FTC and provide them as much information about this attempt to swindle you. Legitimate debt collectors will provide a phone number or address. If one of them contacts you and you don\u2019t wish to be bothered any more, then write them a letter demanding that they stop contacting you. By law they have to do this. Be sure to keep a copy for your own records.<\/p>\n

How Your Debt Is Bought And Sold<\/strong><\/span><\/h2>\n

In some cases, however, a hitherto unknown debt collector might contact you about an old debt and the debt is legitimate. Here is how it works, according to a recent article in The New York Times Magazine<\/i> entitled, “The Dark, Lucrative World of Consumer Debt Collection”<\/a> \u201cWhen debtors stop paying those (credit card) bills, the banks regard the balances as assets for 180 days. After that, they are of questionable worth. So banks \u2018charge off\u2019 the accounts, taking a loss, and other creditors act similarly. These huge, routine sell-offs have created a vast market for unpaid debts \u2013 not just credit-card debts, but also auto loans, medical loans, gym fees, payday loans, overdue cellphone tabs, old utility bills, delinquent book-club accounts. The scale is breathtaking. From 2006 to 2009, for example, the nation\u2019s nine top debt buyers purchased almost 90 million consumer accounts with more than $140 billion in \u2018face value.\u2019\u2026(they are) bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it \u2018paper.\u2019\u201d<\/p>\n

According to that same New York Times Magazine<\/i> article, your debt may pass from hand to hand for years to many different collectors, including debt buyers, collectors, brokers, and criminals who will try to collect every dime of the original debt that they may have only paid pennies for. Some of this debt may be 10 or even 15 years old, long forgotten by those consumers who racked up that debt. And even though the statute of limitations for the debt may be long past, these bottom-feeding debt collectors will still try to get you to pay, by any means necessary, including some methods deemed illegal by the FTC. It\u2019s a fact that the collections industry has more complaints filed against it annually than any other business. In fact, according to that same New York Times Magazine article quoted above, \u201c\u2018false threats of lawsuits  from collectors\u2019 more than doubled from roughly 12,000 in 2008 to more than 30,000 in 2012. And the combined number of complaints about threats of violence and \u2018false threats of arrest or seizure of property\u2019 have jumped, more than tripling. David Torok, who oversees the F.T.C.\u2019s complaint database, speculates that there were \u2018more consumers truly on the edge\u2019 and that collectors were therefore simply \u2018trying to squeeze even harder to get some money out of an extraordinarily dwindling pot.\u2019\u201d<\/p>\n

Dealing With Ethical and Unethical Debt Collectors<\/strong><\/span><\/h2>\n

So whether you\u2019re confronted with recent debts, or debts so ancient that you\u2019ve forgotten about them, the best way to deal with debt collectors is to talk to them. According to an article entitled “How Debt Collectors Get Your Money” <\/a> that quotes Lynn Labrador, a senior director at the credit-scoring agency FICO, \u201cPeople who avoid the phone calls and the letters are more likely to see a lender escalate to aggressive tactics like taking judgments\u2026\u201d So, if you talk to collectors, and are honest with them, there\u2019s no reason why your debt needs to wind up in court. One reason why debt collectors take creditors to court is that they hope the creditor will ignore the court date. When that happens, the judge will generally give the collector a default judgment, which means that you, the debtor, have lost, and will be under legal compulsion to settle with the collection agency. So, if you\u2019re ever served with a summons about a debt, by all means show up for your court date so that you\u2019ll have a chance to tell your side of the story. The best way to avoid dealing with debt collectors is to know exactly what you owe. Get your annual free credit report from Annual Credit Report.Com.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

How Debt Collection Works You may think you already know how debt collection works, but there is more to it than most people realize. There is a whole netherworld of debt collection that deals with unpaid, unsecured debt that might put you into contact with some very unpleasant, unethical people who will do anything, including […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\nHow Debt Collection Works - CreditRepair.com<\/title>\n<meta name=\"description\" content=\"You may think you already know how debt collection works, but there is more to it than most people realize.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.creditrepair.com\/blog\/uncategorized\/how-debt-collection-works\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Debt Collection Works\" \/>\n<meta property=\"og:description\" content=\"You may think you already know how debt collection works, but there is more to it than most people realize.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.creditrepair.com\/blog\/uncategorized\/how-debt-collection-works\/\" \/>\n<meta property=\"og:site_name\" content=\"CreditRepair.com\" \/>\n<meta property=\"article:published_time\" content=\"2015-01-21T13:00:36+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-01T01:00:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2014\/08\/howdoesdebtcollectionwork.jpg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kristy Welsh\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/#website\",\"url\":\"https:\/\/www.creditrepair.com\/blog\/\",\"name\":\"CreditRepair.com\",\"description\":\"We are the credit repair experts\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.creditrepair.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/uncategorized\/how-debt-collection-works\/#primaryimage\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2014\/08\/howdoesdebtcollectionwork.jpg\",\"contentUrl\":\"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2014\/08\/howdoesdebtcollectionwork.jpg\",\"width\":1000,\"height\":665},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.creditrepair.com\/blog\/uncategorized\/how-debt-collection-works\/#webpage\",\"url\":\"https:\/\/www.creditrepair.com\/blog\/uncategorized\/how-debt-collection-works\/\",\"name\":\"How Debt Collection Works - 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