A creditor can legally send any bill that hasn't been paid within 31 days to a debt collection agency. This can have negative consequences for your credit report and score, not to mention your wallet. Creditor and debtor laws are in place to protect both businesses and consumers, and it can be helpful to understand how these laws dictate the collections process. Here’s what you should know.

How Debts Are Collected

Unpaid bills that are 31 days late won't automatically go into collection. The policies of the creditor determine how long they’ll retain the bill before sending it on.

In most cases, the creditor will first try to recoup the balance by calling you and sending you letters or emails. If these attempts are unsuccessful, the creditor will send the bill to a collection agency, sometimes as much as 180 days past the payment due date.

From here on, the debt collector tries to acquire the unpaid balance. They’ll verify the debtor's identity, which they can do by confirming certain information with the debtor or with the debtor's family or friends. However, the agency cannot discuss the debt with anyone but the debtor.

Then, they’ll typically send a letter that validates the debt, including the amount owed and the name of the original creditor. They’ll follow up with phone calls and more letters to try to get the debtor to pay.

Once the debt is paid, the communication stops and the case is closed. If the debtor doesn't pay, the collection agency can hire a creditor and debtor law attorney and file a lawsuit.

How to Avoid Collections

The most effective way to avoid collections is to pay your bills on time. If you need extra time paying off a balance, contact the creditor directly; most will be willing to work with you. When bills begin to mount, revisit your monthly budget and see where cuts can be made.

Also, there are presently restrictions in place that prevent bill collectors from engaging in certain collection activity, as a result of the COVID-19 situation.  You should recognize, however, that those restrictions are not expected to last long, especially in New York State (except for New York City, which has created its own set of restrictions).

If debts reach a point where they become truly unmanageable and you're concerned about debt collectors, you may have viable options worth exploring, such as debt consolidation/negotiation or bankruptcy.  The attorneys at Pirrello, Personte and Feder have a practice focus in both of those areas, and stand ready to assist you, if necessary.

Understanding the debt collections process helps you be a more informed and empowered consumer. If debts are spiraling out of control, let Pirrello, Personte & Feder, PLLC, in Rochester, NY, help. We have more than 100 years of combined experience serving Monroe County and the surrounding counties. They offer representation in creditor and debtor law issues, bankruptcy claims, divorce cases, and other legal areas. Call (585) 544-7090 or visit their website to schedule a consultation.