How Does The Debt Collection Process Work?
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.
Related Content: -
Ten Quick Easy Ways To Reduce Your Debt. I get emails all the time from readers asking on quick tips on getting out of debt, so I figured I would put together a list of a few things I can recommend. However, keep in mind that while getting into debt is very easy, getting out of it is...... - How we paid down our debt and saved money at the same time..it can be done! I have been reading a lot of posts at different financial websites lately about the trouble people are having paying off their credit card debt while trying to save a little extra money for themselves. First of all, anyone doing their best to pay off credit card should be commended,......
-
Settling Debts for Less – Bad Deal for Credit Scores While the benefits of debt settlement companies are being touted around the country, the reality is that settling any debt for less than you actually owe will prove to have a long-term effect on your credit report, whether you are considered debt free or not. There are many consumers who...... -
RAISE YOUR CREDIT SCORE 200 POINTS IN 30 DAYS: Part 2 - Get Out of Debt Fast If I were to rename this series, I would use the phrase âThe Good, The Bad and the Ugly.â Thus, last weekâs article âManipulate Your Creditâ would become âChanges for Good Credit.â Next weekâs âCleaning Your Reportâ would become âErasing the Bad Credit.â And this article would become âAlternatives...... -
Things to Have Removed from your Credit Report pt 2 Continued from part 1. 3 - Charge Offs. When you do not pay off a credit card account or a loan account for a period of three to six months, your creditors are generally going to assume that your account is non collectible, or that it is in default. When......
Before debt collection begins you should try Debt Settlement