If you haven’t had to deal with debt collecting agents, consider yourself lucky. A lot of people suffer from debt on a regular basis with some so serious to the extent that debt collection agencies have to be called in. These professional debt collectors have the sole job of collecting payments for the debts you owe your creditors. If you want to protect yourself from the harassment, you may want to know the stages of debt collection. These debt collectors most follow these stages to ensure that you are given enough due process in terms of collecting your debt payments – no matter how big or small the money you owe.
Below is a guide to the six steps involved during the debt collection process:
Step 1: Letter of Demand
When you are falling into arrears, or when you are falling behind on your payments, you will be sent a letter of demand by your creditor. The creditors will give you about 60 to 90 days from the time of receipt of the letter before further action is taken. Even though you are still in the primary stages of debt collection, it is important to address the issue right away. You either respond with a letter promising when you are going to settle your payments or make the payment right away (or within the designated payment period).
Step 2: Default Notice
The state government requires creditors to issue a default notice to you, the debtor, by mail. This notice warns you about catching up on your payments that are overdue and cover the next payment schedule. This notice might be reflected on your credit history depending on the extent of the debt you owe.
Step 3: Contact Debtor
The primary forms of communication executed by the creditor are mostly done via mail. When no action is performed (such as no payment is made), the creditor will take other measures of communicating with you. They can contact you via phone, email or SMS, depending on which contact information is provided under your records. Most calls are carried during business hours; but when you reach deeper into the stages of debt collection, the creditor representatives will call you even during off-business hours.
Step 4: Locate Debtors
When none of the previous forms of communication were enough to get you to make payments, the creditor will work with a debt collection agency. An agent will be sent to your home address to speak to you about your debts and when you are able to settle it. In some cases, the debt collector will also require payment on the spot.
Step 5: Court Action
If none of the above four steps bring in successful results for the creditor, they will be forced to take the matter into court. The court action proceedings will vary from case to case basis. But once the court serves you with a claim form, you have 14 days to pay the debt or enter into a negotiation with your creditors. Check out Debt Mediators
Step 6: Judgment and Enforcement
Most debt cases rarely reach this point. But you fail to make the debt payment, you could be penalized heavily by the court. Some of the penalties include being forced by the court to settle the debt and the cause being reflected onto your credit rating.