Have you ever gotten that dreaded phone call from a debt collector? If you have, you’d know how scary and embarrassing it is to receive that call especially when you owe someone money.
If you haven’t ever received a call from debt collectors, what should you watch out for in general? And can you get fraudulent calls by people who claim to be debt collectors?
Find out about debt collectors and what you should look out for by reading further. Information on how to deal with debt collectors when you receive a call from them can also be found here.
How They Operate
If you have been wondering, here’s a breakdown of what it is like for debt collectors to operate. First of all, they work in a group and they can operate in agencies while some others operate independently.
Those who don’t operate in these two categories are usually attorneys. The agencies which are most common tend to work as middlemen. These middlemen have clear roles of how they are to operate.
Debt collectors mostly get contracted for debts that are due for over 60 days from their actual due date. After collecting the debt, the collectors have to remit the amount back to the creditors.
Debt collectors are then paid a certain percentage of the remitted amount by the original creditor. The typical percentage of what agencies are paid is from 25% to 50% in some instances.
These agencies can collect debt for almost anything – medical loans, and education loans included.
A number of debt collectors tend to specialize in specific kinds of debts they can collect.
For example, you can find an agency that only collects delinquent debts that are at least $300 in value, and they have to be less than 3 years old.
The debt collectors also have to work within legal limitations depending on the state they are operating in.
Agencies That Buy Debt
There is also another set of agencies who buy the debt from the original creditors. This happens when the original creditor realizes that they won’t get paid so they cut their losses and sell the debt to someone who can recover it.
These collectors, or buyers, have a specific group of debts they buy. For example, they’ll only take debt that isn’t too old and those that no other debt collector has ever worked on before.
The buying process here is usually a bidding process and they tend to pay around 4 cents for every dollar in debt. For example, a debt buyer can pay $4 for a debt worth around $100.
How They Collect
Debt collectors tend to call and send letters in a bid to get the borrowers to pay what they owe. If they can’t reach the borrower, through the given contact info, they use private investigators to locate the debtor.
Debt collectors can also use software to track the borrowers down, and can also conduct searches on bank accounts and other assets that the borrowers have.
What to Expect from Genuine Debt Collectors
There are a number of reports about unscrupulous debt collectors of late, so what can you look out for from genuine collectors? First, they are respectful, and the interaction won’t result in harassment.
Then you need to ask for written verification of your debt – this is your right. The collector will then have to stop all collection protocols and provide you with the verification. Remember that no genuine debt collector operates outside the law.
If the collector is a middleman they have to ask for verification from the original creditor and provide it to you. They also have to operate within a certain time limit, for example, your verification should be made available to you within five days.
Debt collectors operate within the law, at least genuine ones do. The others should be considered hoaxes until they verify the right details.