If you are a creditor who has lost all hopes of recovering any payment against your loan, then you should hold on just a little bit longer as there is still a way to get back what is yours. You no longer need to spend restless nights worrying about losing your hard-earned money in the hands of a delinquent debtor. The answer to your worries is a ‘debt collection agency’. Don’t have any idea who they are? Don’t worry, read on and you’ll be able to find the answers to your questions.
Who are they?
In layman’s terms, a debt collection agency is a type of organization that focuses on the collection of delinquent debts that have been due for more than 60 days and have been completely irrecoverable until now. They are put to do this job by the creditors who see these debts as possible loss and want to cut down on the incurable loss.
Are the same as debt buyers?
No. Debt buyers are completely different from debt collectors. The very basic difference between them is the point that debt buyers actually ‘buy’ the debt from the original creditor. They are no longer accountable to the original creditor whenever they make a successful collection. They keep whatever they collect.
On the other hand, debt collectors are hired by the creditors to recover as much debt amount as possible in return for a share in the total recovered amount. The rest they remit back to the original creditor. For them, the higher they recover, the higher they will earn.
How do debt collection agencies work?
The basic step every debt collection has to take is to first contact the concerned debtor. Usually, in the cases of delinquent debtors, they cannot be reached on the contact details provided by the original creditors. In such cases, collectors hire private investigators or research on the debtors to track down their location and current financial status. This helps them in judging the financial ability of the debtor to repay the amount. If the debtor refuses to pay even after several intimations, then the case is taken to the court and the same is also intimated to the credit bureaus.
Delinquent debts are a huge blow to an individual’s credit score and should be avoided at all costs. A case of debt delinquency can also potentially lead to the forced sale of assets following the court’s order.