It’s natural for you to seek answers to a few unresolved queries if you’ve been harassed by debt collectors or contacted by any of them in the recent times. They are likely to get in touch with you if you’ve been a payment defaulter.
This article is intended to through much light upon the business of debt collection in order to help you understand the perspective of a debt collection agency. You’ll soon gain an insight to the entire process of debt collection, incentives earned by collectors and the factors that motivate collectors. The process of collection turns less stressful as your interactions with debt collectors get smoother.
The Business of Debt Collection
Debt collectors are known to work on behalf of the debt collection agencies. While a few of them are attorneys themselves, most of them are working independently. Delinquent debts of payment defaulters are collected by these agencies and remitted to their original creditors; they are known to work as middlemen under most circumstances. Delinquent debts are the ones that have gone 60 days past due.
Out of the collected amount, a percentage worth 25-45% is paid to the collector by the creditor. Various types of delinquent debts are collected by the debt collection agencies. Such debts may include business debts, unpaid personal loan, debts concerning student loans, car loan debts, medical debts, unpaid mobile phone bills, debts arising out of utility bills as well as credit card debt.
Debt collectors are paid upon recovering delinquent debts that they pursue. They are bound to earn a higher amount if they can recover more. Many collection agencies possess the skills necessary to recover specific debts. For instance, a collection agency might just collect delinquent amounts worth a minimum of $200 that aren’t two years of age. A renowned collection agency will abide by the statute of limitations that vary between states.
For debts that pose a collection challenge, few collection agencies will indulge in a settlement negotiation with borrowers for an amount lower than what is actually owed. Debt collectors may even share past instances with lawyers that seek legal action against borrowers, when borrowers haven’t agreed to meet their demands.