Every debt collection process is different. It can be challenging because every individual has various goals and needs to process the debt.
You may be asking whether you should negotiate with the original creditor or the debt collector. Most of the time, the original creditor will give you better terms for repaying your debt than a debt collector will.
It’s usually not a good idea to pay off the debt collector. Most of the time, your original creditors are happy to get back the money they loaned you.
In many circumstances, paying the original creditor might enhance your credit score.
HOW THE DEBT COLLECTION PROCESS WORKS:
Eventually, if you don’t pay a creditor on time enough, the creditor will close your account and send it to collections. The collection agency bought your debt from your original creditor.
Their goal is to get as much of the original debt as possible.
Most of the time, if the original creditor sees that you’re not paying your debts on time, they will try to get money from you by lowering your monthly payment or lowering your balance.
Debt collectors come in if you fall too far behind in your payments. However, the original creditor has written off the debt as a non-collectible debt at this time.
TO PAY OR NOT TO PAY: ORIGINAL CREDITOR OR COLLECTION AGENCY:
Most lenders prefer to speak with their debtors rather than pass overdue accounts on to a debt collection agency. Original lenders frequently have greater freedom and flexibility when negotiating with their clients.
They might even contact you to ask if you can help them pay off your debt. Your original lender is willing to work with you since they regard you as a customer.
Debt collection organizations exist solely to collect overdue debts. While the original creditor has written off most of the obligation, a debt collection agency attempts to retrieve the money as profit.
The debt collection agency may be ready to forgive late fines, which is advantageous.
To collect debts, debt collectors must adhere to the Fair Debt Collection Practices Act (FDCPA). It is illegal for them to use profane or abusive language when they threaten to repossess your personal or commercial assets or while they are talking to you. But in rare situations, they may be able to garnish your salary.
HOW TO KNOW IF YOUR DEBT IS IN COLLECTIONS:
Most lenders prefer to speak with their debtors rather than pass overdue accounts on to a debt collection agency. Original lenders frequently have greater freedom and flexibility when negotiating with their clients.
They might even contact you to ask if you can help them pay off your debt. Your original lender is willing to work with you since they regard you as a customer.
Debt collection organizations exist solely to collect overdue debts. While the original creditor has written off most of the obligation, a debt collection agency attempts to retrieve the money as profit.
The debt collection agency may be ready to forgive late fines, which is advantageous. However, to collect debts, debt collectors must adhere to the Fair Debt Collection Practices Act (FDCPA).
It is illegal for them to use profane or abusive language when they threaten to repossess your personal or commercial assets or while they are talking to you.
But in rare situations, they may be able to garnish your salary.
In most circumstances, if you are only two or three months late on your debt payments, your original creditor is still in possession of your account.
After this period, the bill is at risk of being turned over to a debt collector for collection purposes. If you believe your lender may have transferred your debt, you can contact them to find out.
THE BOTTOM LINE:
Debt collectors will attempt to contact you to collect as much money from you as they possibly can. Understand your legal rights and responsibilities. You may be obligated to pay the collection agency, but it is illegal to be harassed by the collector.