Ok, so you’ve just defaulted on a payday loan, and your debt has been turned over to a collection agency. Granted, this delinquency will stand out on your credit report, and your credit score will decrease, but you can still recover from that. Note that this event will appear on your credit report within three to six months after you defaulted on your loan.
The best thing to do when your debt goes to a collection agency is to understand how these agencies operate. There are several points involved in this process:
- Your debts may be sold or assigned to a third-party: the payday lender, which is the creditor in case of a payday loan, may choose to turn your debts to the collection agency or sell the debt. If your debt is assigned, the collection agency will try to get the money back in the creditor’s name. If it is sold, the debt will become fully theirs.
- If the debt was assigned, the collection agency can only sue you if they get authorization from the creditor. Once the creditor passes the debt to the collection, the agency will contact you within a few days. All experienced debt collectors know that the best way to recover a debt is to strike quickly. If you’re unaware of how collection agencies can find you, here is a comprehensive list.
- The agency will send their best agents to collect the money you owe them. The agents will do their best to coerce you to pay back the loan. In 2019, the agents have started to use high-tech methods to find you.
- Talk to an attorney: in case you struggle with an aggressive debt collector, contact an attorney and either negotiate a settlement or possibly even prepare for a lawsuit for nonpayment of payday loans deb.