The debt recovery process begins the moment a debtor first misses a payment on a credit account or loan. His original creditor has a set of procedures it follows to attempt to collect the debt before attempting to sell the debt off to a collection agency. Once the creditor sells the debt to a collection agency, a debtor may not have long until he is taken to court to force him to pay the debt.
Contact by Original Creditor
When you miss payments on your loan or credit account, your creditor may contact you through the mail or call you to attempt to collect the payments. These actions may continue for 30 to 60 days after your first delinquency according to the Discover Debt Freedom website. Your creditor may also report your delinquency to all three major credit-reporting bureaus during this time. If your creditor is unsuccessful in obtaining payments needed to bring your account current, your creditor may sell your account to a debt collection agency. This action can further damage your credit score.
Confirmation of Debt
A debt collector must first confirm the contact information he has for the debtor is accurate and that the debt is valid. The collector usually attempts to confirm the debt by contacting the debtor either through the mail or over the phone. Any mailed documents usually contain instructions for the debtor to dispute the debt with the caveat that, if the debtor does not respond within a specified time, the debt is considered valid and collection practices will begin.
Collection Calls
The debt collection agency usually begins collection calls once it confirms that the debt is valid. These collection calls are made in an attempt to contact the debtor and secure payment for the debt or arrange a payment plan that can pay off the debt over time. The Fair Debt Collection Act restricts the times of day a debt collection agency may contact a debtor over the phone and what language a debt collection agency may use with a debtor. If a debtor sends the collection agency a written letter stating he no longer wishes the agency to contact him about the debt in question, the collection agency is required to stop contacting the debtor.
Lawsuit Against Debtor
If a debt collection company is unable to secure payment for a valid debt, the company may move to secure legal counsel and sue the debtor in civil court to attempt to force him to pay. A judgment in civil court may allow a debt collection agency to seize money in bank accounts, garnish wages or take possession of assets in an attempt to recoup money owed for a debt. Some states do not allow wage garnishment for unsecured debts like credit cards, which can limit a debt collection company's ability to recoup money owed.
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