What is Debt?
Debt is the term used for the money, which is borrowed by a person, an organization, or by a firm to fulfill their purchasing needs that could not be accomplished with normal capital resources or situations.
The party who lends the money usually sets up a special agreement according to which, the borrower has to pay back the money with some calculated amount of interest on the specific date.
The terms of the agreement also specify the amount of the interest the borrower has to pay annually.
What is a Collector?
Debt collections are a form of “financial accounts”. They are transferred to the debt collectors; firms who are there to collect the unpaid debt. A firm that you have created the debt with is to send the account to the debt collector’s agency once you fail to make a series of payments.
Some of these debt collectors end up being the debt buyers. What they do is that they actually buy the debt at a certain fraction of the debts face value. Then these people try to recover the whole amount of the debt owed. Companies usually enjoy hiring the debt collectors because they happen to be very cost effective.
Debt collectors are strictly observed by the Federal Trade Commission, which prohibits them from abusing practices.
What to Expect When You Have a Collection Account?
Debt collectors are very good at their jobs. They will literally call you or get in contact with you by any means. According to the law, it is legal for them to bother you until you actually pay up. They are even allowed to ask around regarding you but to save you a bit of the embarrassment they are secretly not allowed to state who and what they are here for.
What Are the Five Things One Should Know When Talking to a Debt Collector?
Paying off your debt can be a great burden; it can even be a major reason for your greying hair! Debt collectors are very cunning people and if you do not have the correct set of knowledge when dealing with them this can literally unleash a world of stress. What we all need to know is that when dealing with a debt collector we have been granted a number of rights. The Fair Debt Collection Practices Act granted these to us.
Here are five of the most import things that you should be aware of:
1. You have rights: It is crucial to be aware of what your rights are when a debt collector contacts you. It is their job to collect the rightful debt you owe them but there are rules and regulations.
2. Making Payments could mistakenly restart the clock: If you happen to get a call about a certain debt, be aware to look into it thoroughly. You have to find relevant information regarding the debt. It might be a valid old account that could state that you do owe money or a portion of the money. This could restart the clock on the statute of limitations.
3. Scammers: As we are aware that scammers exist in every corner of the world and they do not have the best of interest for you in their minds. Debt collectors continuously call you to ask you about the debt you owe them. Make sure that when someone calls you, they are providing authentic information. Otherwise, you could be made a fool and it would be your fault!
4. Do not be afraid to negotiate: Debt collectors are literally getting their hands on whatever payments they could find. There is a good chance that you can talk your way to making less than full payment. If a negotiation is settled, make sure that you ask for it to be in writing. The importance of writing cannot be repeated. Let us just say that it can save you from being taken to court. Once you get that, you can make the payment to your debt collector.
5. Keep records of phone calls and messages: You should be able to keep a file that has all the notes regarding the phone conversations held by the debt collector and you. You should also make the effort to get the written memos to your debt collector and yourself.