If you have recently been contacted by a debt collector, probably for the first time in your life and have no idea how this works, then read on. Are you worried that the debt collector may call again as you are failing your bill or an installment? You are may be understandably nervous about the whole scenario where a debt collector is taking an entry.
Singapore has seen a significant rise in the increasing trend of home loans and business loans. When the debts collection process starts it might turn sour if the payments are failing repeatedly or are delayed due to some reason or the other.
How Does The Whole Debt Collection Business Go On?
Individual debt collectors usually work for a Debts Collection Agency. It is always not necessary to be so, some are individual debt collectors or some are attorneys. The agencies act as a middleman, collecting the debts of customers on behalf of the organization that lends the money, to begin with. The debt collection agency comes in when the due payment is way past the promised date. This is usually 60 days after the promised date.
The debt collection agencies collect the failing debts from the individual and returned the same to the creditor. The creditor pays a percentage on the amount collected by the debt collector or the agency. The debts collection agencies collect the failing debts of all types: medical debts, credit card debts, personal loans debt, business loans debt, automobile loans debt, student loans debts, and also, unpaid utility bills and cell phone bills. Yes, there are agencies that collect utility bills and cell phone bills.
There are instances when the debt collector refers cases to lawyers to file a lawsuit because the debtors simply refuse to pay the debts. In some cases, the debt collector or the debts collection agency negotiate and try to come to a settlement of one-time payment where the debtor has to pay a lesser amount than what is initially owed to the creditor. In such cases, it is a one-time settlement and the debtor must pay in a single time, no installments or stalling the payment date.
Agencies Also Buy Debts from The Creditors
When the creditor is completely sure that certain debts are beyond recovery, then such numerous accounts are packaged together for a debt buyer to buy. The older the account, the lesser amount the debt buyer pays. In doing so the creditor cuts of losses by selling the debt to the debt buyer.
The debt buyers also have the option to choose from various packages of accounts that are not old enough and that no debt collector has worked on the account yet, accounts that are old enough and other collectors have failed to recover the debt and, accounts that fall in between the above two segments.
The type of debt also influences the debt buyer to buy debts. Mortgage debts fetch more buyers while utility debts are not much worth. The debt buyer keeps everything they collect from debt, as they bought the debt they do not send any percentage to the original creditor.
The more the debt collectors collect the more they earn. The debts collection agencies make huge profits from the debt that is condemned or there was no hope of getting a penny from the debtor.
What Does A Debt Collector Exactly Do?
The debt collection agency tries to get in touch with the debtor through phone calls, letters, and e-mails, and try to convince them to repay the debt amount that is long due. When the debt collector or the agency cannot contact the debtor on the given contact information by the original creditor, they take help of various software and hire private investigators to find the exact contact information of the debtor. They may also contact the credit bureaus to encourage payments as a failing overdue debt does great damage to a person’s consumer credit score.
The Final Take
The process of Debts Collection is a legitimate business. A call from a debt collector always does not mean the starting of an abusive relationship. It may be that the call is from an honest person trying to do the assigned task and make a living out of it. Cooperating with the debt collector will is helpful for both the parties. There is no need to panic. Be wise.