How Does Debt Collection Work? How to Deal With Debt In Collections
If you have debts or loans that you need to service, you know how grueling the collection process can be. If you own a business and desire to collect bills from your customers, and they aren’t paying on time (if at all), the stress compounds since you need money to run your business. So, what is the pragmatic thing to help you get paid or even pay off the debts? This is why you need our business attorney to aid you in getting to where you wish to be.
If you are a lender, you understand the value of a positive revenue stream and how negatively performing financial obligations can weigh down a great portfolio. However, you can use the power of litigation and allow our lawyer in Tulsa to convert those non-performing obligations into positive revenue streams.
It has always seemed as though debt collectors are villains who wreck the lives of hard-working citizens. But when you understand the debt collection process, you will get to know that the creditors have a right to their money, and there is a legal process that protects the creditor and the debtor.
How Debt Collection Works
The debt collection process has three phases:
- You will deal with the creditor’s internal collector during the first six months of delinquency. This is the perfect stage to try and settle your debt since no middlemen are involved, and your creditor is still willing to maintain a positive relationship with you.
- Once the lender notices that you will not pay their debt, they will assign an outside organization, also known as a third-party agency. At this stage, the debt is still owned and owed to your original creditor. If the outside organization successfully recovers part or all of the debt, it will earn a commission. The creditor may decide that the commission might be a fee or a percentage of the total amount owed.
- The last stage of the process is where your original creditor writes off your debt and sells it to an outside collection agency (a debt buyer), often pennies on the dollar. Your original creditor will not be involved anymore. So the collection agency will try to get as much of the debt as possible, to make a profit on its purchase.
Recently, most creditors are reaching out to debt-collection law firms than the conventional debt collectors since the communication from a lawyer makes a greater impression, increasing the chances of repayment.
Laws Followed for Debt Collection
Even though a creditor is legally and ethically entitled to the money owed, they are still restricted by law in the methods they can employ to recoup their money. So, the creditor must abide by the following during the debt collection process:
- The collection agency must not discuss your debt with your friends, family, employer, or neighbor
- The collectors can only call you during limited times of day
- The collectors cannot use obscenities, slurs, threats, or insults
- The collection agency is given remedies for consumers who desire to stop collectors from all contact
- The collectors should verify all debts and terminate collection procedures if the verification is not fruitful
The act’s provisions might not cover the original creditors but the third-party agencies and lawyers who are always engaged in the debt collection process.
The Role of a Business Attorney and Lawyer in Debt Collection
Working with our lawyer throughout the debt collection process is a huge plus. Here are the roles our Tulsa business attorney plays during the debt collection process:
Enforce Fair Debt Collection
The beauty of having a lawyer on board is that the lawyer can bring action against the offender when the law is violated. Once our lawyer is involved, communication is done through the lawyer.
Negotiate With Creditors
Our attorney will negotiate balances to a reasonable amount. Also, if the client is willing to pay a certain amount, our lawyer can negotiate with the creditor for a lower payoff amount. If there is a payment plan, the lawyer can float the idea to the creditor to ensure that the debt is paid in a way that suits the client.
Help File for Bankruptcy
At times, declaring bankruptcy is the best option when a client desires to escape multiple default judgments. Our lawyer will discuss the various types of bankruptcy and what each entails. Then, you will be advised on the bankruptcy process.
How Do You Pay Off Debt In Collections?
You can pay off the debt in collections following these simple steps:
- Confirm that you owe the amount stated
- Check your state’s statute of limitation
- Understand your debt collection rights
- Figure out how much you can pay
- Request to have your account deleted if you have paid a large lump sum
- Set up a payment plan
- Make your payment
- Document everything
Paying off debt takes diligence and time. It might take you a long time before you clear a debt. Also, getting your money from a debtor can be a daunting task. In any case, at Aaron Bruner Law, we are well-vast in debt collection and can help. Contact us today.