There are two handy efforts that are predominantly used that a collection agency can legally do that a debtor should be worried about. These involve negative information being reported to the credit bureaus, and the unlikely probability of a lawsuit.
3rd party collection companies have the ability to report a debt to one or more of the credit bureaus, as a “Collection Account,” including the amount, and whether it was paid or continues to be unpaid. Paying off a collection account won’t result in the item being taken off of a consumer’s credit reports – it will only be marked “Paid in full.”
Collection companies can report debts that they have purchased as well as debts that they are working on contingency. Additionally, a collection agency might ask for a debtor’s credit report, so that they can get an idea of his/her general financial situation, and to get an updated address and phone number.
Collection accounts will be restricted to the normal 7 year time span for showing up on a credit report. As specified in Section 605 of the FCRA this time limit is based on the date of the original delinquency. If the debt still belongs to the original creditor, a third-party collection company cannot file a lawsuit. But if the balance is large, the debtor is being resistant, and if there are indications that the debtor has vulnerable assets, the agency may send the account back to the creditor with a recommendation to sue. Each creditor has its own criteria for the decision; for example, the amount must be substantial (often $1500 or more, at the very least.)
Collection companies try not to send too many accounts back, because it suggests that they aren’t very good at collecting debt. Letters and telephone calls are a lot less expensive than going to court. If an agency has bought a debt, then they have the ability to sue, but by that time, the debt is likely to be rather old, and the agency doesn’t have much invested in it. Fear and intimidation are a collectors cheapest tools, since those things can work much more quickly, cheaply, and efficiently than filing suit.
Rapid Recovery Solution is a New Yorkcompany.