http://www.debts.org/index.php en info@debts.org Copyright 2008 2008-12-01T15:28:00+00:00 http://www.debts.org/11/index/how_debts_are_collected/ http://www.debts.org/11/index/how_debts_are_collected/#When:15:28:00Z The following is a typical timeline beginning from when a creditor awards the debt to the debt collection agency:If a debt has lapsed by 90 to 180 days the creditor will sell it to a debt collector. The debt collection firm will attempt to contact the debtor by mail or telephone. If mail or telephone proves unsuccessful they may use other methods. Debt collection agency may conduct Internet and database searches and a practice called “skip tracing.” Skip tracing is when a collector searches for anyone who may know of the debtor’s whereabouts, such as friends, family, neighbors or employers. According to ACA International, in 1995 only about 25% of debt collectors used the skip tracing technique. Today more than 90% skip trace because technological improvements have made searches more successful. Once a debtor is contacted, the collector will negotiate a payment plan. Monthly payment plans are generally the norm but collectors can be willing to reduce the debt owed if paid in lump sums. More....America’s economic slump has seen small business go under at an alarming rate, taking thousands of workers down with it. It’s not just small businesses that have felt the pinch, even the biggest of the big have fallen – think Lehman Brothers. As the economy has reeled from irresponsible lending on Wall Street, debt took hold of millions of homes. Outstanding consumer debt reached $2.59 trillion in September, an alarming increase of $6.9 billion over August.Debt collection companies – and there is over 6,000 of them across the US – have been booming. In 2007, when people were still buying and selling, borrowing and lending, debt collection companies contacted over 1 billion consumers. We wait with baited breath to see what the 2008 figures reveal.While debt collecting has become a growing industry, it has also become more profitable. There are two clear reasons why. Firstly the method of debt collection has been vastly improved. Creditors are packaging together consumer debts and handing them over to a secondary market where they are traded between debt collection firms. By doing it this way, old debts reappear and come back to haunt the consumer who had thought it long forgotten. Secondly, the 2005 bankruptcy law (see Bankruptcy Law Explained) made sweeping changes that benefited creditors. As a result, filing bankruptcy is no longer the soft touch it once was and debts cannot be made disappear by the magic bankruptcy wand. All of which is very good news for debt collecting agencies. The credit crisis has hit credit card companies and loan providers hard. At time such as this means increasing amounts of financial firms are turning to collection companies to retrieve old debts.Better Business Bureau president, David Polino, says: “Its going to take time to see a real spike in collections, but it’s obvious that we have a national economic crisis on our hands and that’s going to force those that are behind on their payments into collections.”Predictive Metrics president, Michael Banasiak, says debt collectors are using his company’s specialist software to recover debts. His computer models help collectors determine which accounts are recoverable. “We are telling collectors the probability of payment and what that amount is likely to be. We are helping consumers get rid of their debt, while helping collectors target those consumers who are more likely to pay.”Have something to say on our Forum? Click here. How Debts Are Collected 2008-12-01T15:28:00+00:00