Debt Default and Collection Agency
Shopping for a loan after multiple missed payments on your mortgage? Now what? What will happen if you owe a lot of money on your account but cannot afford to pay back?
If you owe money to a creditor or lender like 24/7 bail bonds Grover Beach CA, you need to know that your outstanding bills can be collected through collecting agencies. These are typically independent contractors that work for creditors in helping them collect bill. The collecting agency is assigned the job after a certain number of attempts by the credit in collecting the owed amount. The agency is paid a commission in return to the fund collected as well. The percentage may vary anywhere from 10 to 50 and the remaining money goes to the creditor. Sometimes, the credit will sell the debtor’s account. When this happens, the agency has the right to sue the debtor on its own behalf.
Beyond calling the debtor and sending notices, there are certain things that the collecting agency can do to get repaid. A debtor needs to be aware that the agency is regulated by the Fair Debt Collection Practices Act and can only take actions as specified in the act. In most cases, the agency has the right to report unpaid debt to credit reporting service. However, the act prohibits the collector from using abusive and annoying tactics on the debtor. The agency needs to follow rules strictly or face consequences in the court of law. Any firm can be considered a debt collecting agency if it regularly engages in this task.
As per the rule of thumb, the debtor needs to be given notice about the amount of money owed with the name of the creditor on the statement as well as due date. The collecting agency must also send a written notice containing the time allowed to pay back the debt along with the action that will follow upon failure of responding to the notice. Any communication between the collector and the debtor should clearly specify the intent of notice, and the purpose of collecting information. The debtor has thirty days from receiving the notice to respond through writing. The borrower can write back a letter mentioning how he or she will proceed with the notice – whether the money will be repaid, debt will be disputed and so on. In response, the debtor can also request the agency not to contact again.
While a collecting agency has the right to demand that the debt be paid on time, there are a number of actions that are strictly prohibited on the FDCPA. For example, a collection agency cannot harass or induce violence on the debtor in any way shape or form. The agency cannot contact the debtor at working places or at times that are inconvenient or considered inappropriate. If the agency threatens the debtor, the debtor has the right to file a court case and claim compensation including punitive damages. Again, these rules pertain to collection agency and not the creditors.