Debtors

The person who owes the money for a service or purchase is the debtor. Debtors may not be able to pay (default) for a number of reasons: because of financial instability or over commitment; due to an unforeseeable event such as job loss or health problems; dispute or disagreement over the debt amount or what is being billed for; or dishonesty on the part of either the creditor or the debtor. The debtor can be either an individual person or an entity, such as a company. Collection of debts from private citizens is subject to more restrictive rules than businesses.

Types of debt collector

Collection agencies that specialize in debt recovery law come in different types. First-party agencies are usually subsidiaries of the company that the borrower originally owes money to. Third-party agencies, on the other hand, are separate companies hired by a company to collect debts on their behalf - often for a fee. Debt buyers, finally, purchase the debt at a reduced price and then try to collect the full amount from the borrower. Depending onwhich country you're in, there will be different rules and regulations regarding collection agencies.

Sale of debts

When creditors sell debts to third-party companies, this is called “debt collection”. The company that buys the debt is called a “factor” or “debt buyer”. They pay a percentage of the debt's value, and then they pursue the debtor for the full balance including any interest that's accrued. This immediate revenue for the creditor, even though it's less than the original value of the debt, comes with the shift of work and risk to the debt buyer.

Collection practices

Debt collectors who work on commission may be highly motivated to convince debtors to pay the debt. This type of collection activity may be regulated by the nation in which it occurs. Collection agencies are sometimes allowed to contact individuals other than the debtor, usually in an attempt to locate the debtor but without mentioning the debt. A person who is not responsible for the debt or familiar with debt recovery law may be contacted by a collector in error. For example, this may happen to victims of identity theft or people mistakenly targeted due to a similar name. Alternatively, the alleged debtor may dispute that the debt is owed. In such cases, the alleged debtor can require that the collector or creditor prove that the debt is owed—no jurisdiction recognizes a debt simply because a collector says so.

Collection account

A collection account is a person’s loan or debt that has been turned over to a collection agency by a creditor.

Credit record

A credit record is a historical record of a person or business entity's creditworthiness. This includes information about late payments, defaults, and bankruptcies. These details are usually placed on a borrower's credit record by credit reporting agencies, and they can remain there for several years. However, it's important to note that not all reports to credit agencies are properly authenticated or checked for accuracy.

Debt Recovery Law

Debtors

Types of debt collector

Sale of debts

Collection practices

Collection account

Credit record

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