What you can envisage and do in different debt collection stages
The possibility of skipping a credit card bill payment for millions of people is very high at a time when the condition of the job market is very bleak. The unemployment rate of the country was 7.8 percent in December 2012 after creating 155,000 jobs in the same month. So, it is not unnatural to see that so many people fall into debt traps every year. Now, different people have various ways to deal with debt collection calls and letters. Some people simply think that they can come out of the debt trap by ignoring the collection calls and letters. However, they forget the very fact that debt monster would find them within a few days or months.
Overlooking the debt collection calls or notices won't help you resolve your problem. Debt collectors will trail behind you on your credit record and the court. Here's what you can expect at different debt collection stages. Find out what you can do in those situations.
1. Debt collection stage - You've missed payments for 30 days
What may happen at this stage: At this stage, creditors will not use aggressive tactics. Instead, they'll use soft-tactics to collect money from you. Creditors will send letters and emails to you. They'll call you and ask you pay the bill politely. There is yet another thing which creditors can do. They can report the matter to the credit bureaus.
What you can possibly do: If you anticipate to miss a payment, then get in touch with the creditor as soon as possible. The creditor may probably agree to set up a payment plan with you. In case a creditor calls you for payments, then receive the calls to avoid a financial storm. Co-operate with the creditor in order to arrange a payment plan.
2. Debt collection stage - You've missed payments for 60 days
What may happen at this stage: Your creditor is most likely to assign your account to the internal collection department. The calls will be less friendly now. Your account will become seriously delinquent if the debt is not paid off. If the creditor has not reported the account to the credit bureau earlier, then he may do it now.
What you can possibly do: Find out if you can qualify for a hardship plan after talking with the creditor. Try to reschedule your payment plan now. You may be imposed with a penalty fee.
3. Debt collection stage - You've missed payments for 90 days
What may happen at this stage: The collection calls will become seriously aggressive. You're more likely to receive callsand letters frequently. There is a great probability that the creditor will close your credit card account. You may come to know about it when the stores decline the credit card. Late fees and interest rates will be charged on the credit card account.
What you can possibly do: Apologize to the creditor for your bad financial behavior. Try to reopen the credit card account after arranging a disbursement plan with lower payments. The account may be re-activated only after you've completed the payments.
4. Debt collection stage - Your account is charged-off
What may happen at this stage: Your creditor will assign or sell the credit card account to a third-party collection agency. The credit reporting agencies will be notified that your account has been charged-off. You'll get letters and notices from collection agencies.
What you can possibly do: Ask the third-party collection agency to validate the debt. Get in touch with the creditor and verify collector's identity. Contact the collection agency and try to settle the debt. Try to reduce the debt amount as much as possible. Get the agreement in writing. This will prevent the debt collector from filing a lawsuit against you after making payments. Check your credit report and find out if the status of the account has been updated on your credit report.
You may end up getting sued at the last stage of the collection stage. The collector fails to reach you and registers a case at the court. You'll obtain court summons and if the collector wins judgment against you, then your assets will be seized or wages will be garnished.
In case you get court summons, then show your face at the court. You can present your side of the story to the judge. You may dispute the debt and avoid the court from issuing judgment against you. The judge may also facilitate a repayment plan for you.