We all know how easy it is to fall into some type of debt, or better yet to simply get behind on bills. Does high debt affect your credit score? Can it stand in the way of you having the ability to purchase a car or home? The answer to both of those questions is, yes.
This is why so many people go into a little panic when they see themselves fall behind. Keep in mind that as long as you keep making payments, even though they are late, things may not be as bad as they appear. Companies typically do not close out your account unless they have seen no activity on it for a while.
When they see that you have given up, in most cases that is when they give up. Typically the company will give you a couple of calls and send you a few letters. If these attempts are not fruitful then they will choose a debt collection company.
The purpose of these types of companies is doing what could not be done prior, which is to collect a debt. The quicker the company collects this debt for their client the better. Debt collection companies work in different ways, there is no particular set of rules.
Collection agencies understand that one of the reasons why this case has ended up in their office is because the person may not have had the money to pay it. Perhaps the person has lost their job or perhaps there was a death in the family. In many of these cases, it was just a matter of a shortage of money.
This is why collection agencies, often offer the individual a reduction when it comes to the amount. They may offer to reduce the amount if the person goes along with paying off the entire amount at one time. This strategy works often. Imagine being able to save a couple of hundred dollars if you paid the amount off in the next few days.
Collection agencies collect on delinquent accounts of all different types. It could be a student loan, a utility bill, or a very popular one, a credit card bill. When companies send cases to collection agencies, they do not do it for free.
The collection agency gets a percentage of the amount that is collected. The percentage has to be agreed upon by the creditor and the company. It could be anywhere from 25% to 45%.
This agreement typically motivates the collection agencies to work as hard as they can to contact the individual who owes the money. Once they finally get the person on the phone, they negotiate with the person. This is their chance, perhaps their last chance, to come to some type of agreement.
If no agreement can be made, the collection agency may go as far as assigning the case to an attorney’s office. The attorney will then file a lawsuit against the person. Cases like this may come about for a number of reasons. One reason could be that the individual is disputing the amount. And when in court, they will be more than happy to fight for what they feel is right.
In other cases, it could be they are rejecting the notion that they are the ones who are supposed to be billed. Perhaps there is a discrepancy when it comes to who is supposed to pay for the bill and the only way to figure it out is to go to court.
The purpose of taking a case to court is for judgment. Judgments can only be given through the courts. Once the attorney’s office has a judgment they can then began to take monies out of the person’s bank account or paycheck. Many people that owe, try to resolve the issue before it gets to this point.