Generally, the first phase, before your lender turns to the services of a debt collection agency, is that the institution will try to settle the issue with you, the debtor. For instance, the lender might invite you to reimburse the owed amount in a specified amount of time at a specified rate. If you have a debt of say $2,000, they might ask you to make monthly repayments of $200 for a time frame of 10 months, and if they fail to reach their target, then the matter goes on to a debt collection department.

There is a great difference between an initial collection letter that you will receive, which will mostly sound like a reminder, and a final collection letter which resembles a threat that if you do not send in payment, they will send your account for collection. Certainly, everybody wants to avoid a County Court Judgment (CCJ), because from there on legal action is taken against you so that the lender recovers its loss in full. If you keep up not making payments, the most common action taken is that with the help of a County Court Judgment (if your status is: employed) there will be issued an attachment of earnings order. In plain words, this means that each month a given amount will be withheld from your income, up until the whole of the debt is paid off.

Events do not follow each other so fast, as in between the agreement among creditor and debtor, collection letters and the follow-up of a County Court Judgment, you have the right to reply as well. You can send formal/informal letters informing the creditor about your situation such as reasons for which you cannot afford payments as scheduled (you lost your job, illness related issues, and other). The whole procedure becomes very time/nerve consuming, that is why it is very important that you do your best and try to make your payments on time, or if already faced with a debt collection letter try to obey the stipulated requirements in order to avoid further complications.

The first one in line to suffer when there is debt is you and your family; the second is your credit history. With a flawed credit history, it is unlikely that you will be able to contract a loan on good terms. There will be lenders hunting you to go for their loan, at exceptionally high rates however, exactly because you have a history of bad credit. Relating to debt collecting, it is not news that many try to implement threatening tactics in order to have you pay. Keep in mind however, that if you have a debt it doesn’t mean you are an outcast, and you can turn any time to the services of a lawyer in order to defend your rights, especially if you consider such attempts of threatening or intimidating from the part of the debt collector occurred.

Once you are faced with such a situation, the best you can do is to be informed. You should allocate a good amount of your time to research, in order to learn your rights. Reading the Fair Debt Collection Practices Act or the Fair Credit Reporting Act, which you can do online, will definitely enlighten you and make you understand some of the fundamental rights and allowed practices of a debt collector. Your obligation to restitute the owed amount will not be erased, and you have to do your best in order to repay your loan, but you also have to stay informed as to until where do the rights of a debt collector expand.