Techniques for Collecting Debt

Techniques for collecting on a debt vary from creditor to creditor. If you owe money and you default on the account, you can expect your creditor to begin relentless debt collection efforts. Some creditors stop collection attempts after six months of non-payment, while other creditors continue on and use the courts for help in recovering defaulted funds.

Collections Department

The majority of credit card companies and banks have a collections department. Individuals employed in this department frequently contact past due account holders to schedule payment arrangements. Creditors vary, and some sell delinquent accounts to collection agencies after charging off the debt. Collection agencies can call, write or file a lawsuit to receive past due funds. Once a past due account reaches a collection agency, a collection account appears on the debtor's credit report.

Judgment

It is smart for consumers to avoid a credit judgment, which is an order to pay a past due debt issued by a judge. Judgments are irreversible, and once the reporting agencies receive information about a judgment, this negative item remains on credit reports for seven years. Threatening a lawsuit and potential judgment may prompt some debtors to pay their old debt.

Wage Garnishment

In states where wage garnishment is legal, a creditor can speak with the court and ask permission to garnish a debtor's wages. The court grants a wage garnishment following a judgment. This debt collection technique helps creditors acquire past due funds because employers deduct a percentage from the debtor's paycheck, and then sends the deducted funds to the creditor. Wage garnishments persist until creditors receive sufficient funds to settle the account, or until a debtor contacts the creditor on his own to pay the remaining balance.

Bank Seizure

Another technique available to creditors after obtaining a judgment is a bank seizure of levy. This debt collection method gives creditors authorization to freeze or remove necessary funds from a debtor's personal bank account. All funds in the account become the creditor's possession, and creditors use these funds to pay off the past due debt. Debtors lose complete access to the bank account until the creditor reverses the freeze. Creditors need permission from a court to seize or levy bank accounts.