If you have a very late debt, be careful! Besides that you are making a bad credit history, the company that lent you can ask for support from a collection office, which will start an annoying cycle of attention calls.
If you send your debt to a collection office, the first thing is to verify it and then negotiate with your new creditors. We explain how.
What is and how does a collection office work?
A collection office, or legal office, is an agency of lawyers, accountants and / or administrators, which has the slogan of recovering debts due from thousands of clients. Past due loans refer to the indebtedness of people who requested a credit card, a loan or other type of credit and, for some reason, they could not catch up on their payments, becoming delinquent clients.
Sometimes, when the company that grants the loan can not recover its capital, it asks for collection offices, the collection and recovery of these overdue portfolios; It is your right to do so. It can also happen that these collection agencies buy the expired portfolios for a minimum amount, and become the “new” owners of the debt to whom, from that moment, we should pay them.
When a collection office pursues the payment, you should know that your debt is still valid, only now you must negotiate with them, and most likely your debt has changed ownership.
When and how can they sell or transfer my debt to a collection office?
There are two big cases that you can face with the collection offices. First, that a lender, for example a bank, calls a collection agency to recover the money, but the bank remains the owner of the debt; and then, the office is only dedicated to charge and be an intermediary for the bank.
The second scenario is that the lender, for example a department store, transfers or sells the past due portfolio, after three months of delay in the agreed payments. In this case, debts “change ownership” and we must confirm exactly who we should pay now.
The new creditors can propose negotiations to improve your record, reduce or settle the debt (deductions), but the recommendation of the National Commission for the Protection and Defense of Users of Financial Services, Cordusen is:
- First, verify that the debt is no longer the bank or the original company, because if it is still the debt owned by them, and we accept a discount on the debt, we run the risk that the collection office does not properly report the payments and agreements; while the debt increases.
- To check if your debt changed from “owner”, check your credit history in credit bureau, here.
- Since the collection offices are not officially regulated financial entities, the ideal is to trace the background of the company and if you are going to negotiate a reduction in the debt with them, do it in front of a conciliator or with the tutoring of experts of Cordusen.
- In theory, after 90 days of delay in a payment, the debt can be “requested” through the support of collection offices, if the lender institution so requires.
How does the transfer of my debt affect my record in the credit bureau?
You have to take into account that when you can not pay a loan, the delay is recorded in the credit bureau. If you transfer your debt to a collection office, the note in the bureau remains intact. And even if you liquidate the debt through a negotiation or a reduction, a negative status still appears, because for technical issues, the debt was not paid in full.
Remember that NOBODY can modify your credit bureau history , since it is only a record that shows the payment capacity with which you really count, the delay times, or if you definitely do not pay.
The negative history affects when requesting some other loan or credit, since all the institutions, are based primarily on it as a reference of our ability to borrow and pay.
Remember, collection or legal offices do not legally appear as institutions ruled by Cordusen or Protectos, and could surprise us with abuses. Try to try to settle the debt and if you reach agreements with them, make sure that there will be proof of the commitment, both with the original institution with which you acquired the debt, and with the office.
Settling our debts on time avoids paying interest on interest, and above all, prevents our debt falls into the hands of third parties. The collection offices can be a big headache with unexpected visits, unpleasant calls, and above all, the affectation to our daily tranquility.