Under the Fair Debt Collection Practices Act, personal debts are subject to collection by a collection agency when the debtor, the person who borrowed the funds, falls behind on required payments.
Whether a home loan or personal credit card, collection agencies are permitted to use a variety of techniques to recover outstanding balances but only when the debt falls into arrears.
As a consumer, understanding the methods by which a collection agency is permitted to recover debt, and suggestions for resolving a debt with the collector will work to improve communication on both sides of the debt collection process.
Under the Fair Debt Collection Practices Act, the debt collecting agency can be the company for which the debt is actually owed or it can be an agency assigned, by the company, for the purpose of collecting the debt.
Collection agencies, as well as the company to which money is owed, may use a variety of techniques to recover debts that are in arrears. Methods such as written communication by email, fax or U.S. Postal Mail are quite common.
As a general rule, the collecting agency will attempt to resolve the outstanding debt through written communication so as to alleviate any unnecessary communication and to alert the debtor of possible issues with regard to past due payments.
When the debtor fails to respond to the collecting agency, and the debt remains in arrears, the collection agency will, as a general rule, begin a more aggressive process in an effort to recover debt including phone calls at the debtor’s home and even at the place of employment.
In addition, the debt collection agency may contact family and friends in an effort to establish communication with the debtor.
While many debtors consider this a form of harassment, in most cases, the debt collection agency is simply attempting to establish a method of communication in an effort to resolve the debt which may even include adjusting payment arrangements.
As a consumer, with debt, it is important to understand that the debt collection agency, whether in the house at the original company on which the debt was established, or a third party agency is permitted to collect a debt under specific guidelines of the Fair Debt Collection Practices Act.
While many individuals choose to ignore written communication and avoid phone calls, this method will, in most cases, not prove beneficial to the debtor.
When unable to pay outstanding debts, for whatever reason, the best method to avoid harassing phone calls and communication from a company is to simply establish communication, be honest about the financial situation, attempt to organize and negotiate a workable payment arrangement.
In doing so, the company to which the debt is owed, as well as the collection agency, will remedy their outstanding financial ledgers and the debtor will sleep more peacefully at night.