What happens if I don't pay Debt Recovery?

 Debt collectors are infamous for being obnoxious and challenging to work with. Having said that, it's probably because you lacked the funds to pay the payment in the first place if a debt reached collection. What happens if you simply ignore the debt collectors, then, is a valid issue.

How does a debt initially end up with a debt collecting company?

Let's say you are unable to pay your mortgage or a medical payment. Your bill will often be sent to a debt collection agency that has been retained by the business you owe money to after around 60 days of nonpayment (although this obviously varies). If and when you pay the debt collector, the money will typically go mostly to the company you owe the bill to, but the debt collector will also take a cut—often between 25 and 45%. The debt collector may potentially have "purchased" the debt from the original creditor, in which case they will be paid in full.

If you don't pay debt collectors, the following is the best case scenario.

You can receive a letter from the debt collection agency offering to settle the debts for less than the entire total after that 180-day period. It's possible that a creditor will decide it's not worth continuing to pursue collection operations. The truth is that your credit is still probably going to suffer greatly even in the best-case scenario. It's quite likely that your account has been designated as being in collections after 180 days of unpaid balances after being reported to a credit bureau. Even if this happens, you might not even be informed.

Your debt will be taken up by a debt collection agency.

If a debt is more than 31 days overdue, a  debt collection agency may assume control of it in accordance with federal law. However, for up to 180 days, certain creditors could make an independent collection attempt. It's crucial to keep in mind that a debt is typically submitted to a collection agency after around 60 days.

• The fact that a debt collection firm is employed by a business that is owed money is the first thing that stands out about them. If you settle the loan, the money will return to the business that originally held it.

• Debt collectors occasionally sell the debt they have acquired to another business they believe has a better chance of recovering it.

Here is what would happen in the worst situation if you don't pay debt collectors.

However, debt collectors have other options at their disposal and won't necessarily give up if you don't pay. The debtor may opt to initiate legal action on their own, employ a law firm, or even sell the debt to a buyer who may decide to do so later.

What will thus happen to your credit score specifically?

The answer is, as you would have guessed, not good. You may anticipate a 100-point decline in your credit score in the first six months after missing a debt payment. After 180 days, things are likely to get much worse, and you never know how low your credit score may drop.

Conclusion 

Most individuals are unaware that most debt collectors are open to negotiating a payment schedule, so if you are having trouble making a full payment on a debt, experts advise trying to reach an agreement. However, a debt will follow you, thus there is no such thing as "ignoring" one.