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In today’s world of mass credit defaults, many people are finding themselves facing the debt collection process with one or more of their creditors.  Understanding how this debt collection process works can help a person determine what course of action they should be taking and what will happen next.

The First 30 Days
In the first thirty days after a bill has become due, the company that has sent the bill takes some predictable actions.  For the first two weeks, the company may not do anything about the payment except charge a late payment fee to the account, which can be for any amount between $5 and $50.  The amount of the fee is typically dictated by the company and disclosed in the terms and conditions of the service agreement that was accepted by you.

After the first two weeks have passed, the company may begin to call to remind you to make your payment or to inquire when a payment will be made.  The calls are typically made by representatives of the company that holds the account and automated messages are left by the company for the person to contact the company about their account at their earliest convenience.

Between 30 And 60 Days
After 30 days have passed, the company begins to take additional action against the account holder.  It is within this time period that most companies report the missed payment to the three major credit bureaus for reflection on the person’s credit history.  Once this action has been reported to the credit bureaus, it will remain on the credit report for up to seven years.  The only way for this item to be removed from the credit history is for the person to dispute the information and prove that an error was made.

Once the missed payment has been reported to the credit bureau, the calculation of your credit score will reflect the missed payment.  The effect that the missed payment will have on the person’s credit score will vary from person to person depending on what other information has been reported to the credit reporting bureau within the last few months.  After the original missed payment has been reported, the creditor may choose to report the status of the account on a regular basis until the missing amount has been paid to the company.

At any time after 90 days, the creditor that holds the account can hire a debt collection agency to attempt to collect on the debt on the company’s behalf.  These debt collection agencies are responsible for maintaining contact with the debtor to attempt to collect on all or part of the debt that is owed.  These debt collection agencies can pursue you for the debt that is owed until the debt has expired but they are often interested in making a deal for the repayment of part of the debt to settle the account.