What is a debt collector and what does he do? | personal finance

Debt collectors are either heroes or villains, depending on your point of view. If you’re in business and you’re owed money, hiring a debt collector can help you get it back. If you are the person who owes money, you may be avoiding that confrontation from a debt collector.

Still, whatever your feelings about debt collectors, also called bill collectors, the good ones are just doing their job. This is what a debt collector is and what they do.

Debt collection is an industry that exists to help businesses, large and small, get the money they are owed. debt collectors They work for debt collection agencies, with a mission to convince people to pay what they owe. It can be a stressful and rewarding job at the same time. Debt collectors come across many people who often want to pay their bills but can’t afford it; At the same time, debt collectors are helping businesses, many of which can’t afford to let unpaid bills slip by.

There are many reasons someone ends up owing a company money. According to the Consumer Financial Protection Bureau, $88 billion in medical bills are currently with debt collection agencies, affecting 1 in 5 Americans.

A collector’s job is to try to help the person pay what they owe, which should help improve the debtor’s credit score and also help the business owner.

If you’re working as a debt collector, you’ll probably be in a call center at a collection agency, rather than the original creditor’s office. While it seems like it can be a stressful job, it is reported to be a profession with average job stress. There are also many advantages, especially if it is a full-time job with benefits. Barriers to getting the job tend to be low, you’ll need a high school diploma, though you may need more education if you want a higher-paying position. Many collectors report having a healthy work-life balance.

Debt collection agencies have one main mission: to convince someone to pay the money they owe on a debt. Often, if the debt is significant, this is done through installment plans. Generally, debt collectors will contact debtors by phone or mail. A new rule from the Consumer Financial Protection Bureau that went into effect on November 30, 2021 states that debt collectors can communicate with debtors via email, text and social media. If a debt collector communicates through social media, it’s supposed to be through a private message and not, say, in a Facebook thread that everyone can see. There should also be a way for the social media user to opt out of receiving communications through that platform.

There are two main types of collection agencies: first-party creditors and third-party creditors.

A first party creditor is not so much a debt collection agency as it is the debt collection wing, or a subsidiary or affiliate, of a company. If you’ve had someone from your credit card, auto loan lender, or financial institution bring you current on a loan, you worked with a creditor firsthand.

Third-party creditors are collection agencies or debt buyers. These collection agencies are often retained by primary creditors, often after 30 days from a bill’s due date and once the primary creditor feels there is no point in spending much more time and effort collecting a debt.

Often the third-party creditor buys the right to try to collect the bill within 30 days to six months, and possibly longer, such as one or two years or more.

These collection agencies are expected to collect debts responsibly. For example, they are not allowed to put you down or harass you. They can’t send someone to your house to ask for money. They’re not supposed to call more than seven times in a seven-day period, and if you talk to a debt collector, they have to wait seven days before calling you back. They should also not call you at work, neither before 8 am nor after 9 pm

But some debt collection agencies go overboard, ignoring these rules. In 2021, the Federal Trade Commission issued refunds of more than $4.86 million to consumers harmed by illegal debt collection practices.

Still, there are plenty of reputable debt collection agencies that provide a much-needed service. If you are a small business owner and simply cannot afford to be scammed, a debt collection agency can save your life.

As for how they make their money, debt collection agencies sometimes work on a commission basis: they’ll get a portion of the debt paid to the company. And sometimes the debt collection agency, or debt buyer, buys the debt. According to the Minnesota Attorney General’s website, “It is not uncommon for a debt buyer to pay less than five cents for every dollar owed.”

So a debt buyer could buy a $1,000 debt for $50 or less. If the debt buyer can convince the person who owes money to pay $1,000, that’s a profit of $950. If the debt buyer can at least convince the indebted consumer to pay, say, $300, that’s still a profit of $250.

The only thing you need to do is stop for some time. It’s not that you shouldn’t pay a debt you owe, but you do need to gather some information first.

For starters, it may not be a real debt collector you are talking to.

“One of the biggest problems with paying off debt, especially student debt, is the constant problem of bogus phone calls from debt collectors, as well as those offering debt relief. Knowing exactly who to trust in this environment can be tricky,” says Melanie Hanson, senior editor at EducationData.org, which provides data on the US education system.

“As a general rule, never trust a phone call on its own merits,” advises Hanson.

She suggests confirming anything you hear on the phone about your student debt by checking with an online debt collector and, ideally, checking your loan accounts directly with your lenders.

“Fake debt collectors and bogus relief programs thrive on obtaining personal information from gullible debtors who believe they are talking to someone official,” says Hanson.

Ashley Morgan, a bankruptcy attorney who owns Ashley F. Morgan Law in Herndon, Virginia, agrees that you don’t want to rush into paying off a debt, even if you’re pretty sure you owe the money.

“If a debt collector contacts you, it’s important to verify the debt,” says Morgan.

He also advises against admitting over the phone that you owe money. After all, you may not, and this is not the time to give a debt collector ammunition that they can use against you later. Instead, Morgan says, “he should request that they send him written correspondence about the debt they believe he owes them.”

Once you have that information, if you have any questions about the debt, you should submit a request for information in writing, Morgan says.

“The information requested is important in helping you determine whether or not the debt is actually owed, and whether the debt collector has the ability to collect the debt,” says Morgan. She points out that debt can fall under the statute of limitations. After three to six years, and possibly longer (depending on state law), debts are often uncollectible. As in, no one can sue you for the debt.

In fact, you may want to be careful when making a partial payment on extremely old debt. In some states, if you do that, the time period will reset, and suddenly the statue of limitations may not run out for many more years.

It also helps to learn as much as you can about the consequences of not paying a debt – like watching your credit score drop. remember that you can negotiate with debt collectors and get them to agree to let you pay less than you owe. Learn about your rights with a debt collector, so you know if you should report them to the Federal Trade Commission or the Consumer Financial Protection Bureau. Some of the tactics that debt collectors cannot do include: