Debt Collection Methods

IWithin the glorious sphere of debt collections, there are varying methodologies that a commercial collection agency may employ while undertaking the tedious process of obtaining payment(s) of a delinquent account. Obviously, different commercial collection companies employ their own subjective methodologies when obtaining delinquent accounts. However, most U.S. commercial collections agencies utilize an objective methodology in pursuing outstanding debts. This homogeneous methodology employed by nationwide commercial collection agencies is effectively as such because both federal and state deploy strict legal parameters regulating the process. A commercial collection agency must adhere to these guidelines before ensuing recouping of a delinquent account.

When a debt collections agent legally pursues an indebted individual and that debtor refuses to repay his or her account balance, then an extremely painful process for the indebted may occur. This includes a garnishing process, which will be pursued and utilized by that applicable commercial collection agency.

In the world of commercial collections, a garnishment is when a commercial collection agency takes an indebted party to civil court and the terms are established. It is then that the indebted party shall commence paying for a delinquent balance. Barring the type of the original transaction between the debtor and first party, a commercial collection agency will take an indebted individual small claims court. Within the civil court proceedings, if a commercial collections company has succeeded in meeting all those applicable laws pertaining to their process of the commercial collection, then the state will rule that the defendant (debtor) shall pay the commercial collection company until the delinquent debt is paid in full. This includes repayment even if doing so would result in a debtor paying on it for the duration of his or her life. Thus, the only option an indebted party has in negating an outstanding debt (aside from paying it in full) is electing to declare personal bankruptcy.

Laws regarding garnishment are in accordance with the Federal Fair Debt Collection Practices Act. This Federal act prohibits a commercial collection agency from garnishing over 25% of indebted parties total disposable earnings in one week. If a situation presents itself wherein a debtor only earns the minimum federal hourly wage, then in accordance with federal law, a commercial collection agency will garnish an amount equal to 30 times the debtor’s minimum wage.

An example of a commercial collections agency enacting the garnishment is as follows: If “Marcus” has been court ordered to have his wages garnished in a civil court hearing brought upon him by “Agency B” in lieu of his unwillingness to pay a particular debt, then every week “Marcus” shall have a designated amount automatically withdrawn from his paycheck. Be the ruling as such, if “Marcus” earns $800 in disposable income each week, then a maximum of 25%, or $250, will be debited by “Agency B” from his outstanding account balance. If it is the case that “Marcus” owes “Agency B” a total of $2000, then he shall continue to have $250 withdrawn from his disposable income until an 8-week period is fulfilled (8 weeks (x) $250 = $2000). Once his account has been paid in full, “Marcus” shall have his debt relinquished and begin his process of wherein he was earning $800 of disposable cash per week.