Because collecting on unpaid debts can be time-consuming and expensive, many lenders and other entities hire third-party companies to track down payments from those who fall behind. Michigan residents may receive a letter in the mail warning them that their delinquent debt is now in the hands of a collection agency. For some, this may intimidate them into paying off the debt as fast as possible. Others, however, make the mistake of refusing to pay the third party.
Since collecting on the debt is the sole job of these companies, a consumer can expect them to be relentless. This alone is often enough to obtain the payments they are seeking. However, when borrowers do not pay the debt in collections, they can expect negative consequences, such as damage to their credit ratings, difficulty obtaining more credit, trouble finding a job and eventually a lawsuit from the collector.
When a collection agency files a lawsuit that results in a judgment, it may seek garnishment on the borrower’s wages. This can quickly complicate an already difficult situation since many bills go to collections because the borrower simply cannot pay. When wage garnishment kicks in, a struggling budget may spiral out of control.
Financial difficulties can be embarrassing, and this may cause a consumer to ignore the signs of danger. A letter from a collection agency is not one of those things that is smart to ignore. Instead, it may indicate it is time to seek debt relief by speaking with a Michigan attorney about options for a fresh start, including the possibility of filing for bankruptcy.