Legal And Illegal Tactics A Debt Collector Will Use To Collect: Debt Collection Basics Part Three

In the first two articles I wrote about what a collections account was, how sending delinquent accounts out to an agency profits a creditor, and the act of a third party collection agency buying old debt from a creditor.

I wrote about what type of information a collection agency will collect and use in their efforts, and also that third party collection agencies are governed by federal and state laws and are overseen by the FTC.

A minority of collection companies will utilize deceptive, strong arm and illegal methods to confuse and scare debtors that include pretending that they are one of their creditors and asking them to verify information, pretending to be an old friend or neighbor to catch a debtor off guard, repetitively calling or mailing a debtor to the point where it gets to be a nuisance, or sending threatening letters or leaving threatening voicemail messages.

Legal but manipulative practices include pressing the debtor, preying on their emotions, and using vague threats like “respond within ten days or further collections attempts will follow.” Other illegal practices include making an idle threat of litigation or pursuing litigation when the debt collector has no intention to, threatening to throw a debtor in jail, threatening to garnish wages or seize bank accounts when they have no authority to, lying about the amount that is owed, or asking for more than what is owed are used as well.

For the collections industry, time is the enemy and a good bill collector is completely aware of this bit of information. Their main task is specifically to get money as soon as possible.If you are talking to a debt collector, keep in mind that at any time you have the legal right to tell them you are busy and will call them back if you are flustered, hang up, cool off, develop a game plan, and contact them later. An aggressive debt collector will ask you why you can’t make payment arrangements today.

Rapid Recovery Solution is a commercial collection agency that writes articles on commercial collection companies. This article, Legal And Illegal Tactics A Debt Collector Will Use To Collect: Debt Collection Basics Part Three has free reprint rights.

Dealing With Debt Or Bankruptcy

With consumer debt at an all time high, owing a debt can seem very overwhelming. A great deal of people have looked into the world wide web and have seen advertisements alleging that they can offer debt relief as a quick fix. As alluring as these ads may seem, it is important to be on the lookout for the validity of the claim.

Many of these claim they can offer a quick fix, but that quick fix might be bankruptcy. And while bankruptcy is one way to attack your financial problems, in most cases it should be a last resort. The fact that you claim bankruptcy will stay on your credit report for ten years which means that your chances of getting credit, jobs, a place of residence, or insurance are significantly lowered.

It’s always a smart move to think about other options before deciding to file for bankruptcy. Speak with your creditors. Most of the time a re-payment plan can be etched out that is changed or can be paid in installments. Credit counseling services can work with you and your creditors to make debt repayment plans.

If you are thinking about a second mortgage, be wary. These loans need your house as collateral. Bankruptcy can put an end to foreclosures, debt collection activities and it may rid you of unsecured debts. Exemptions are also provided that allow you to you hold on to certain assets. However, personal bankruptcy does not usually eliminate child support, fines, taxes, alimony and in some cases student loans.

It will not usually permit you to keep your property if your creditor has a security lien or mortgage that has not been paid. A relatively recent tweek in bankruptcy laws makes certain hurdles that you have to overcome before you can even file for bankruptcy, it doesn’t what type of bankruptcy. First, you have to get credit counseling from an organization approved by the government within six months before filling.

Also, try to keep in mind that in certain cases you must pass a test that requires that you confirm that your income level doesn’t exceed a particular amount.

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What Is A Collection Company? Pt. 1

What is the deal with debt collection companies?

Two possibilities exist.

A few creditors will try to deter a debtor by utilizing a separate company name, address, and phone number for their internal collection departments, with the purpose of giving the impression of an “outside” agency. This strategy is should only be used when the debt is recent (under six months past due.)

Yet the majority of debt collecting activity is done by a third-party collection agency; these are separate from the original creditors, and “work” debts on behalf of various lenders. They may also buy bad debts which have been designated as charge-offs by the original creditor.

This article will spotlight 3rd party collection companies

How does a debt collection company get money?

Third-party debt collection companies generally work based on commission, where they receive a percentage of the amount that they collect. Debt collectors are often paid a low base wage with additional commissions based on their personal performance.

A few debt collection agencies additionally purchase massive groups of charged-off bad debts for a tiny percentage of the face value (amount owed.) After a debt is sold, the debtor now owes the full amount to the purchaser. Since the chances of recovery decrease substantially with time, an agency might only pay 1% – 5% of face value. The agencies’ profits come from the difference between the purchase price and the amounts that are eventually collected.

How do they work?

Letters and telephone calls are the primary tools of a collection company.

What is the deal with collection letters?

The 1st demand letter must state that the recipient has the right to dispute the validity of the debt or request verification of the debt (in writing). By law the agency must send some confirmation after verifying it with the original creditor. Demand letters should additionally have the statement that they come from a debt collector, and that any information obtained will be used for the purpose of collecting said debt. Collectors are not permitted to print anything on the outside of the envelope which may indicate or suggest that this is a collection attempt. The return address label must also be discreet, so many companies will just use their company’s initials, or some other nondescript name.

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