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Author: Sergei Lemberg
What Does Sent to Collections Mean?
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General Rule: A debt sent to collections means that a third-party debt collector will take over the account. This typically happens when a debt is past due for several months.
When a person takes on a personal debt, a creditor is the party that lends the money. Typically, a consumer will make payments of their debt directly to the creditor. However, what happens when a consumer does not pay a debt for several months?
Often, when this happens, a creditor will send the debt to a collection agency. The collection agency will now be responsible for collecting the debt. This means they have the right to contact you and collect the debt. It also means that you have additional protections under the Fair Debt Collection Practices Act (FDCPA).
In this article, you will learn about why and when a debt collector may take over the collection of a debt. You will also learn how this impacts you and the payment of your debt.
Why is an Account Sent to Collections?
A collection agency typically receives an account when it is significantly past due. Before this happens, a creditor will likely send multiple notices to try to collect the past-due debt first. However, at some point, the creditor will decide they do not want to collect on the debt anymore.
How long must an account be past due before a creditor sends it to a collection agency? There is no set time. However, most creditors will wait until the debt is at least 6-months past due before sending it to a debt collector.
Note: A collection agency is different from a debt buyer. A debt buyer purchases the debt at a discount. In contrast, a collection agency collects the debt on behalf of the creditor.
What Changes When a Debt Collector Receives a Past-Due Account?
When a creditor sends an account to collections, the debt collector will take over efforts to collect the debt.
What is a collection agency? A collection agency is a company or department that specializes in collecting past-due accounts. Typically, they will receive a fee that is a percentage of the debt they collect.
Does anything change about the debt? The amount owed does not change. However, all communication and payments should now go through the collection agency.
Do I have any rights when dealing with a debt collector? Yes. A major change is that you now have additional protections under the FDCPA. The FDCPA specifically protects consumers from abusive collection practices from third-party debt collectors.
Collection Agencies and the FDCPA
Since a collection agency is now managing your debt, you have additional protection under the FDCPA. For example, a collection agency will have to provide you with a validation notice containing information about your debt. They must also identify themself and their company when they communicate with you.
The FDCPA also prohibits harassing and deceptive debt collection practices from third-party debt collectors. These protections include how a collection agency contacts you, avoiding misrepresentations and keeping your debt private.
If a debt collector engages in abusive collection practices you can sue them under the FDCPA. You can also report them to the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC).
Conclusion
No one wants their debt sent to a collection agency. However, continuing to ignore the debt is not going to improve your situation. It is important to establish communication and figure out a way to pay off the debt.
Now, if the debt collector is engaging in questionable collection practices, they may be violating the FDCPA. If that’s the case, discuss the situation with a consumer rights attorney. They can help protect you from debt collection violations.
Additional Resources
About the author:
Sergei Lemberg is a consumer rights attorney, practicing since 2006, whose practice focuses on consumer law, class actions and personal injury litigation. He is known for a United States Supreme Court case (Facebook v. Duguid) defending consumers from autodialers under the Telephone Consumer Protection Act of 1991 to send unsolicited text messages. He is also the author of Defanging Debt Collectors, a book that teaches consumers how to battle debt collectors and win.
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