What happens when a debtor fails to make payments as required by his contract? Creditors are allowed to try to collect the money owed to them by any legal means. These include making phone calls between the hours of 8 a.m. and 9 p.m., sending letters and bringing legal action against the debtor. The creditor/collector can also report late and non-payment of debts to credit reporting agencies, which will reduce the debtor’s credit rating and make it more difficult to get credit in the future. Creditors/collectors also can repossess from the debtor the property held as collateral.

Before attempting to repossess the property (which is collateral for a consumer debt) either by court action or self-help, the creditor must send a notice of right to cure, informing the debtor that he is behind in his obligation and the amount of money it will take to bring the account current. The creditor needs only send this notice once during the life of a loan. Although the creditor can repossess the property without going to court, such repossession must be done peacefully. This allows the creditor/collector to enter private property to seize its collateral. It does not allow the creditor to break doors, windows or other property, or to use violence. If such repossession cannot be done peacefully or if real property is involved, the creditor/collector must resort to the courts to reclaim its collateral.

If you have further questions concerning collections, please do not hesitate to contact us.

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