A debt-collecting firm may contact you in case you have not paid your instalments, card bills, or any other essential bills, which have become overdue because of different reasons. Managing these overdue debts can be difficult, but once you have good knowledge about what you are, dealing with it will make managing such situations easy.
How the debt-collection process works?
A debt collection though differs according to the creditor, but following is the common way of handling this process.
- Initially, the debtor receives a notice about their due amount which is done by their company
- The account is then charged off which means that the debtor will have no access to their account.
For instance, if you have credit card debt then your card may be blocked for further use.
- After not getting any response, the creditor hires a debt-collecting agency who will take the whole responsibility of collecting dues.
- The agency will contact the debtor to verify their identity and dues
- A debt validation notice is sent which requires the debtor to respond within 5 days. it includes all the details about the dues and how to go about it.
- Unless the debtor agrees to pay, the agency keeps on sending notices, calls and mails
- By this time, you can negotiate for the time and amount that you need to pay
- After due is cleared the account is closed
What happens if you do not pay the debts?
If you fail to pay your dues, the debt collecting company will consult an attorney to drag the case into court. The creditor along with the attorney and agency will sue you for not paying. You will be sent a notice with a court appearance, if failed to do so, you will legally be claimed as a defaulter.
If you appear in the court, you will be required to present your case according to which the judge will announce the ruling. By this point, not only do you have to pay the debt, but also if you lose there will be other expenses on your head too like lawyer fees, collection costs and others.
How to handle, in case a debt collecting company gets involved
If a debt-collecting agency contacts you, ideally it is advised that you should respond to them immediately. However, in case you fail to do so, you can try the following options:
- Keep a proper record of all the contacts made to you. Keeping all conversation on record will work as evidence if needed later.
- Fix a meeting and explain your situation to the debt company. This will benefit you by giving you more time to pay or the company might offer you a plan to make sure you can afford to pay back.
- Based on the amount due, workout on your repayment plans. You can provide the company with your plan, based on current financial circumstances. This will keep the company informed about your affordability.
- Go for credit counselling to get a better idea about dealing with your debts.
- You can even contact debt relief companies to help you take off this pressure of paying back immediately.
The bottom line
The process of getting rid of dues can be an overwhelming phase, but there are many ways by which you can easily get on track. It is very important to understand the process and efficiently take control of your finances. If at any point, you feel that handling debts are getting difficult, as a debtor you can also hire a debt relief company that will help you in getting started.
Sometimes, you might be wrongly pressured about the dues, which you do not owe, and then you can take legal consultation to deal with it. For instance, if you are contacted by a company specialising in debt collection UAE, then contact an advocate in Dubai who will help in clearing off the situation.
Rajat Sahoo, is a blogger and have years of experience of the domain. I love to read and write about latest and useful tips for clothing, Fashion, Law and lifestyle.