What Are Collectors and At What Point Do They Contact You?

04 January 2019 54959 Views
What Are Collectors What Are Collectors

If a borrower is very late in repaying a debt to a bank or online loan company, and if he doesn’t answer his phone or talk to the representatives of those companies, the companies often turn to a collection agency to collect the debt. But what exactly are debt collectors and should borrowers be afraid of them?

Every company has its own point at which it decides to get debt collectors involved. But when a financial company does finally make an agreement with a collection agency, it usually assigns the right to claim a refund on the received loan to that agency.

At this point, debt collectors begin using their main tool: psychological pressure on the borrower. They scare the borrower with the threat of a bad credit score or even loss of property. Even so, collectors can be reasonable and it is possible to make a deal with them.

It’s important to remember that the only way a borrower’s property can be transferred to a creditor is with a court order. And banks and online loan companies usually don’t take debt collection cases to court, but instead try to get the money back in other ways.

One way a borrower can pay back a loan is through refinancing or, in other words, taking out a new loan to cover a previous one. (What else can happen when repayment is overdue? Read here: What If I Can’t Repay On Time?)

It should be noted that getting a collection agency involved is the last resort for banks and online loan companies. It doesn’t matter to them if the amount of money that was borrowed is large (as with bank loans) or small (as with payday loans). Since the financial companies lend money to so many people, even small loans can add up to a lot. That’s why they care about debt repayment. And if you’re a borrower, you should too.

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