How Debt Collection Companies Work

Have you recently started receiving debt collection calls for past due loan or credit card payments? If this is your first interaction with a debt collector, you may have many unanswered questions like “What happens if I ignore debt collection calls?” or “Can a debt collector really  garnish my wages?” These are legitimate worries and misinformation can lead to you making regretful decisions. Join us as we take you through the business of debt collection and the freedoms and limitations of debt collectors.

Debt Collection The Business

The process of debt collection involves many entities including the original creditor or lender, collection companies, debt collectors, and in some cases, attorneys. All of these parties play a role in recovering allegedly owed funds from you, the alleged debtor. A debt collector can either work through the employment of a debt collection company or independently.

Creditors and lenders often acquire the services of debt collection companies to collect delinquent debts with an agreement to allow them to keep anywhere from 5% to 75% of what they collect. These companies are third-party debt collectors and collect various debts including:

  • Medical debts
  • Credit card debts
  • Auto loan debts
  • Business debts
  • Cell phone bill debts
  • Student loan debts
  • Utility debts
  • Personal debts

It’s not uncommon for collection companies to specialize in specific types of debts. For example, one company may only pursue debts that are at least 36 months old and are over $400 while another may exclusively collect debts that are over $1,000. Some of the more reputable debt collectors will only pursue collection on debts that are within the statute of limitations.

Operations of a Debt Collector

Debt collectors are known for making phone calls, but they will also send letters, emails, and text messages to allegedly delinquent debtors. When they perceive contact attempts to be unsuccessful, they will often contact family members, use research databases, and even hire a private investigator to locate you (these acts may be illegal). Debt collectors also have the freedom to look into your assets to discover your ability to make payments.

One of the most impactful actions they can take is reporting your delinquency to the three major credit bureaus: Equifax, Transunion, and Experian, which can result in a noticeable hit to your credit score. Although they have access to your bank account information, they cannot garnish your wages without having won a judgment in court, and even with a favorable decision, they must notify you and request the funds from the bank.

Consumer Rights Violations

Upstanding debt collection companies operate within the confinements of the law, but many others violate consumer rights throughout the debt collection process. They intend that you will be unaware of federally-mandated debt collection regulations that limit their actions.

The Fair Debt Collection Practices Act (FDCPA) is in place to protect all consumers from intrusive debt collection tactics including:

  • Sending faulty debt collection letters (happens more than people would believe!)
  • Suing for a time-barred debt
  • Calling multiple times a day
  • Exaggerating the debt amount
  • Failing to disclose their identity
  • Threatening you with jail time
  • Using aggressive language
  • Using an automated dialing system to place calls or send texts

Hold debt collectors responsible for their unlawful actions by acquiring the legal services of a local consumer rights attorney. The Florida FDCPA lawyers at The Law Offices of Jibrael S. Hindi can evaluate the facts and help you recover up to $1000 per violation! Contact us today at 1-844-JIBRAEL for a free case evaluation. If we determine that you have a case, there is no cost to you to pursue the claim. Under the FDCPA, the debt collectors must pay your attorney fees if they have violated the law.

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