At some point in your life, you may find yourself facing a debt collection action. The action may be due to a job loss that left you unable to pay your bills or a fraudulent use of your credit that resulted in bills being accumulated in your name without your knowledge. Regardless of the action that initiated the debt collection efforts, the process can be a scary one for people that are unsure of how the debt collection process works. Understanding how the debt collection process works can erase some of the fear that can accompany the action and help you make it through the process with as little financial damage as possible.
First Thirty Days
In the first thirty days after an account has become delinquent, many creditors do not take any action at all other than sending late payment notices to the account holder. In some cases, a late fee or non-payment fee may be charged to the account, but this amount is generally inconsequential. Many people miss payment deadlines and make up the missed payment within the first thirty days of delinquency so it is not worth it to make businesses to invest a lot of resources in taking action against debtors that are less than 30 days late with their payments.
Thirty To Sixty Days
After an account has been delinquent for more than thirty days, businesses start calling and sending notices to the account holder requesting the immediate payment of the past due amount. Depending on the company and their policies, these contacts may be by mail, by email, or by telephone. The delinquent payment is often reported to the credit monitoring bureaus during this time, causing a decrease in the account holder’s credit score. If you need more time to pay, you will want to contact representatives of the company and try to work out some sort of payment arrangement based on your current financial situation.
Sixty To Ninety Days
If the company still has not received a payment after sixty days, they will take further action to encourage the account holder to bring the account current. These actions include placing a negative mark on the person’s credit history that will last for the next seven years and becoming more aggressive in their collection efforts. The company may refer the account to their collection department or send the information to an outside debt collection company that will get to keep a portion of the funds they recover. The debt collection company will continue to call your home or office and send notices by mail to try to get you to pay off your debt until the statute of limitations for collecting the debt has passes, typically a period of seven years.