How Do Creditors Collect Debt?
Different types of lenders, all have different methods of collecting outstanding debt, all of which might be faster than others, slower, or be either friendly or not understanding about it.
Regardless of how creditors choose to contact you or collect debt, all have the same purpose, which is to retrieve as much of the amount, if not everything, possible at all costs.
Whenever a customer shows signs of not being able to repay their debt, creditors take it very seriously, which is all because of the fear of their company losing money. If it’s a small amount, a lot of creditors will allow consumers to take their time with repaying it, but if it’s bigger, which in most cases it is, the company is at risk of losing a lot of money, which is the main reason why they will try several methods to get customers to pay them back.
Since each creditor is different, one can never be certain about the methods they choose to collect their consumers’ debt from them. However, most creditors stick to a simple process.
Depending on whether you have difficulty paying off short-term debts, or conclude, to settle it in arrears, you might still be able to keep your accounts open and pay your debts the usual way, in which you’ll only be monitored by your creditors and the credit bureau accordingly.
What happens if you miss payments?
If you miss one payment
You’ll start receiving messages and notifications with regards to your late payment. It acts as a warning to pay your debt before it reaches arrears. A specific time-frame to pay your debt is given before your account gets handed over to arrears.
If you miss three to four payments
In this case, you’ll receive a lot more pressure to repay your debts. Your creditors will approach you more firmly than before and might also threaten you with further action. If your credit account is registered with the Consumer Credit Act, you’ll receive a full notice, which after your account will default, leaving a big impact on not only your credit score but your entire credit file.
If you miss five to six payments
By now, you’ve probably received plenty of letters, calls, and threats from creditors. It will result in all your loans and debt to have defaulted, which also means your account has defaulted and has been passed over to a specialist debt collection firm.