Many people in Tennessee carry some sort of debt. It may be a mortgage, a car loan or credit card debt, to name a few. While most people dutifully pay back their debts, there will always be some that do not make the required monthly payments on their debts. When this happens, lenders may work with debt collectors to try to recover what they are owed.
Before enlisting the help of a debt collector, generally, the lenders will attempt to recover debts internally for the first six months the debtor is delinquent. Sometimes, it is possible for the lender to reach a settlement with the debtor that is satisfactory to both parties.
If the internal collections fail, a lender will assign the debt to an outside organization. The lender continues to own the debt, but the third-party agent will be the one contacting the debtor to collect what is owed. If successful, the outside organization will receive a commission from the lender.
Finally, if the outside organization is unable to collect on the debt, then the lender will write it off and place it up for sale to an outside collection agency, for example, a debt-collection law firm. The collection agency will generally purchase the debt at a price that is lower than what is owed. At this point, the collection agency owns the debt and the original lender is no longer involved in its collection. The collection agency will then work with the debtor to collect on the debt.
Debt collectors are not always the monsters they are made out to be. They are simply trying to obtain what the lenders they are working with are owed. While debtors do have rights under the Fair Debt Collection Practices Act, there are lawful means through which lenders can try to collect on debts. Lenders who are facing claims that they violated debtors' rights or who are having difficulties in recovering what they are owed may want to take the steps necessary to understand what options they have to legally protect their interests and their rights to collect on the debt.