Usually the debt collection process follows the same path for most consumers who have fallen behind on their payments. First, the original creditor (the actual institution that lent you the credit) will make attempts to collect the debt from you. If this fails, they will send (or sell) the account to an outside collection agency, who will make attempts to collect from you, and if this doesn’t work, they will assign the account to an attorney in your state to pursue legal action to collect the full outstanding balance. In some instances, the account will never be sent to a lawyer, but in other cases, the original creditor will send it to an attorney immediately for full payment. Every scenario is unique and results vary depending on the circumstances of the consumer debt.

Stage 1: Friendly reminders to pay

This typically occurs when a consumer is 30 days past due. Whether through statements in the mail or an automated message the creditor will notify you politely that they never received payment this month. At this point, the creditor will also penalize the consumer with late fees and a higher interest rate.

Stage 2: Late payments are reported to the credit reporting agencies

This often happens after someone is 60 days past due, but other creditors will do this immediately if a payment is late.

Stage 3: Increased collection activity

Whether the account is past due 60, 90, or 120 days, most credit card companies will start bombarding the card holder with automated collection calls at this point.

Stage 4: Probable charge off

Once an account is 120, 150, or 180 days past due, the creditor will most likely charge off the debt. This is an accounting practice that refers to writing the debt off the company’s books and reporting it as a loss to the IRS, which saves them money on their corporate taxes for the year. The account will also likely be reported as charge off to the credit bureaus, which will have a negative effect on your credit score.

Stage 5: Account assigned to a third party

Once an account has been charged off, the creditor will also decide to either sell the debt to a junk debt buyer, assign the debt to a collection agency, or send the account to a lawyer to pursue legal action against the consumer. In most but not all cases, the credit card company will either sell the past due debtor assign it to a collection agency.

Ways To Deal With Past Due Payments

If you have past due payments it is likely that you could use the help of a debt program to manage your credit cards . There are two types of companies that offer these types of services. The first is debt settlement, also known as debt reduction. Debt settlement involves negotiating to lower your credit card debt, in some cases by as much as 40 to 60 percent of the balance owed. If you are experiencing a hardship and as a result you need a low monthly payment , then it is likely that debt negotiation is the appropriate solution for you. To learn more about debt settlement, simply fill out a form and let PayingPaul.Com match you with a pre-qualified provider to get a free consultation. Start today!

Another option is credit card counseling. Credit counseling can put you back on track by combining your debt into one payment, lowering your interest rates, and getting the credit card companies to agree to waive any past due fees. These programs can get you out of debt in 4 to 6 years.

Let PayingPaul.Com match you with a debt service that can help you! Fill out a form for a free, no obligation consultation!