Economic struggles are some of the most stressful and challenges issues people face. Many individuals and families face heavy debt and financial obligations. Sometimes, it may be difficult, if not impossible, to keep up on bills and pay on time. This can happen often with credit cards and medical payments. If you fail to pay up, you’ll not only incur late fees and get frequent calls from the company or creditor, but collection agencies may step in. Eventually, even law firms may start contacting you about making payments. This may lead you to wonder whether the firm has the right to do this.
What the Collection Agency Does
If a person’s account goes beyond 90 days late, the company may turn over the collections process to an outside organization to handle the matter. The collection agency should inform you that it is acting for the company. If you owe the company money, the collection agency will likely bombard you with calls, letters, emails or a combination of all of these. If you still fail to pay, the company may choose to take legal action.
When Lawyers Get Involved
Law firms can assist in debt-collection efforts and may do so to accelerate the process. However, law firms may only seek collections on behalf of the company and must make it clear that it is doing so. They may also not engage in harassment or abusive tactics to get you to pay.
When Debt Collection Becomes a Lawsuit
A creditor or company may hire a law firm to pursue a lawsuit against a consumer who has ignored the debt collection agency’s efforts to retrieve funds. This process is separate from debt collection and must explicitly state this. The law firm that contacts you about such a suit must be licensed to practiced law in the state in which you reside.
What You Can Do
Your first responsibility should be to pay the debt, if possible. If you are not in a position to do so, most companies and collection agencies are happy to work out payment plans with you. If you are still unable to make any payments, and you face the prospect of a lawsuit, consult a lawyer that specializes in bankruptcy law. Your lawyer will have the experience and knowledge to provide you with additional guidance or may be able to negotiate terms with the creditor.
Rest assured that initial contact from a law firm to collect a debt is not a lawsuit. However, it can develop into this if you do not respond and take action.