Receivables Performance Management

Receivables Performance Management | What Happens When Your Debt Goes into Collections

Receivables Performance Management | What Happens When Your Debt Goes into Collections

When people get behind in their payments, a debt can often go into collections. Of course, in such scenarios, that’s when Receivables Performance Management does our best work, helping our clients get out of seemingly bleak financial situations involving unresolved debt.

We thought we’d shine a light on what happens when a debt goes into collections, that way, should it ever happen to you, you’ll know what to expect and how to get through it.

First Comes Default

If you’re 30-60 days late on a payment, your creditor will begin contacting you. Usually they’ll be looking to make some sort of payment arrangement that will bring you back to current as soon as possible. Remember, creditors don’t WANT to send you to collections. They want you to make your monthly payments on time.

Next Comes Delinquency / Sent to Collections

Within three to six months after you default, if you’ve failed to make contact and set up an arrangement with your creditor, you will likely be turned over to a collections agency or sold to a debt buyer.

The most common forms of debt that get sent to collections are phone-related bills and credit card bills, followed by utilities and automobile.

Debts Can Be Assigned or Sold

When it comes to your debt, Receivables Performance Management says the creditor can continue to own it, or turn it over to a debt collection agency as an assigned debt to collect. The third scenario is that the creditor can sell the debt outright to an agency (also called “purchased debt”).

Bill Collecting Happens to Be a Lucrative Business

First off, high-powered collection agents often get paid high sums, and they only get paid for results. Other debt collectors might get paid meager wages, living off of commission that they only see if they collect your money. This means that you might be dealing with a stressed-out, often crass or rude collector who will resort to any means necessary to get what they want.

Debt Purchasing Has Never Been More Popular

Buying debts is a booming business. If you have an old debt that has been purchased, you might find yourself dealing with a person who bought your debt for pennies on the dollar. They might not have any access to your original documentation – just a name and an amount on a spreadsheet. They might not even have correct information.

Deal with Your Situation Head-On

Ignoring your financial situation if you’ve been sent to collections is one of the worst choices you can make. Instead, make sure that you create an actionable plan to get yourself out of the situation. Set up monthly payments to settle the debt. Do everything you can to avoid being sent to collections, because it will impact your credit.

Now, if you find yourself in a situation where you can’t get a debt paid, you can always call Receivables Performance Management reviews. We’re well-versed in these situations and we specialize in getting our clients out of the most seemingly bleak situations. Contact us today for a consultation and we’ll explore your options.

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