How Does a Debt Collector Go About Collecting Money?

Collection Agencies

A debt collector is employed by a collection agency. This type of business specializes in working with defaulting debtors to achieve a repayment of an entire outstanding debt or at least a partial amount. The collection agency receives a percentage of the collected funds in payment for their services. The initial contact a debt collector will make with a debtor is a dunning letter. The is essentially a bill that details the amount owed, to whom the money should be remitted, when the payment of the balance due is expected, the phone number of the collection agency, and also a notation that failure to pay the bill will result in an adverse notation on the debtor's credit record. Even as collection agencies do not usually receive payment in response to the initial contact, the letters do serve as a request for contact; debtors quite frequently call the collection agency and speak with a debt collector in response to receiving such letters.

Follow-up Phone Calls

If the debtor fails to pay the outstanding debt and also does not contact the collection agency, the debt collector will attempt to contact him by phone. The collector uses the phone numbers that he has on file for the debtor. The goal is to ensure that the debtor is aware of the outstanding balance and to persuade him to make good on the debt. When the debt collector makes calls and receives an answer--instead of simply a recorded message--the collection agency requires that a timestamp is placed on the call. Subsequent phone calls are usually made during that same timeframe to ensure that the debtor is actually at home.

Other Ways to Collect

If phone calls to the debtor's home remain unanswered, the debt collector will attempt to locate the debtor by contacting the employer, a friend, neighbor, or any other contact noted in the file. Usually these facts are supplied by the debtor during the initial credit application. The goal is to track down the delinquent debtor and strongly urge him to make payments on the outstanding debt.

Payment Plan

After the debt collector is successful in making contact with the debtor, every effort to achieve a repayment in full is made. If this proves unsuccessful, the collector is usually willing to work out a payment plan with very specific terms. Failure to adhere to even one of these terms will result in further phone calls from the collection agency.

Involvement of an Attorney

Should--in spite of the debt collector's best efforts--the debtor fails to make the repayments as scheduled, the collection agency will refer the debt to a collection attorney. The attorney will file a suit in court and seek a judgment. If a judgment is granted, the attorney may place a lien on the debtor's property or garnish his wages until the debt and attorney's fees are paid in full.