People of any nation or economy require financial help for which there are many financial institutions to provide the required funding. The fund provided will be considered as a debt and will be termed either short term, long term or as a medium-term. The term will be a fixed period within which the principal amount along with the interest has to be paid.
When people fail to pay it on regular installments as agreed, debt collectors are sent to collect the unpaid dues from the people.
Debt collectors generally collect errant bills such as the automobile loan, personal loan, credit card or EMI invoices, etc and provide advice on how to repay their debts user to avoid burden because of growing interest rates. The debt collectors either work individually or under any debt collecting agency. It is a $13 billion business that employs many in this sector. This is a legal business
Role of a debt collector:
These debt collectors approach the borrowers through phone calls, emails or through letters in which the collectors persuade them to repay what they owe. Despite all the communication, if the borrowers could not be reached, they will be tracked with private detectors or their bank accounts and their assets. However, there are some do’s and dont’s that the collectors have to look into:
- Collectors cannot sue borrowers for what they don’t owe and can sue them for the amount they owe.
- Collectors cannot harass the borrowers although they can pressurize them to pay.
- They can approach you formally but cannot make it to one’s workplace.
- The debts can be sold and the collectors negotiate the amount that has to be paid.
Difference between a collector and a creditor:
It is always stereotyped that debt collectors are abusive and the borrowers have a bitter relationship with them. But many collectors are trustworthy, straight forward and friendly when they handle the customers. This is also because of a confusion between the debt collectors and the creditors. Creditors are people who are money lenders as well as collectors whereas the debt collectors are mere brokers who earn commission around 25%-45% from the agency for every debt that they collect. Thus both of them might sound similar but they have their differences. Thus a debt collector is needed in a society to manage the delinquent bills.