The evolution of a debt

 

  1. Obtaining your credit card or loan or medical debt or any other unsecured liability.
  2. You cannot pay for over 30 days
    1. Your creditor phone calls will likely increase. Your creditors are allowed to call you via the law during reasonable hours and no more than a certain amount of time.
    2. Your credit report will probably received a 30 day late report that will bring down your credit score.
  3. You cannot pay for over 60 days
    1. Your creditor will probably be calling you anywhere from 1 to 8 times each day during normal hours.
    2. Your credit report will almost certainly receive a 60 day late payment that will impact your score considerably.
  4. You cannot pay for 90 to 180 days
    1. The frequency of phone calls will likely increase dramatically and you will probably hear from multiple representatives from the original creditor.
    2. Your credit report will very likely show these late payments that unfortunately are typically listed as cumulative which therefore will dramatically impact your credit score.
  5. You cannot pay for 180 or more days
    1. With most creditors if your debt has exceeded the delinquency level of 180 days your account will likely be "charged off" and sold to a collection agency that is also referred as a "third party debt collector". Collection agencies will purchase your debt for pennies on the dollar in an effort to collect the full balance. The older the debt is from the "date of last activity" the less the debt is typically sold.
    2. The collection agency will normally try and call and send you letters informing you that they now own the debt and are collecting the original balance. Collection agencies are notoriously aggressive with their collection efforts and some even disobey the law protect your rights that's also referred to as, "Fair Debt Collection Practices Act".
    3. Though it typically doesn't happen after a debt has been charged off a collection agency can refer your file to a collection attorney. The third party debt collection (collection agency, collection attorney, anyone involved in collecting debt that doesn't have the rights of the original creditor). If a collection attorney thinks that he can collect form you he will decide if he wants to file a claim against you in court. The court used is civil court and it's NOT considered a criminal proceeding. You have the option to show up at court yourself, hire a lawyer, or not show up at all. If you do not show up in court or defend yourself in any fashion the judge will often issue a "Default Judgment" against you.