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Understanding debt collection

´╗┐Understanding debt collectors

Your creditors may use debt collection agencies to ask for payment from you. Since debt collectors are not court officials, they do not have the powers to enter your home or seize your property. They can only visit your home, phone, or write. This is done to talk to you about the debt and how to pay it back.

Paying a debt collection is sometimes painful since the service or product you are paying for has been consumed. However, there are no other options but to pay off the debt. Giving money to a collection agency may feel like you are being bullied but there are benefits of getting rid of those collections for good.

Why pay the debt collectors

Debt collection calls are often a bother. To get rid of these, you need to clear your debt with the collectors. Most banks will not approve your credit card or loan application, as long as you have outstanding debt. This limits any mortgage, or any car loan being advanced to you. Some employers may also not hire you for specific jobs if you have any debts.

Additional benefits

Payment of debt will also help improve your average credit score. A paid collection is good for your credit score than an unpaid one. You will also eliminate the risk of being sued for an outstanding collection. Paying all or part of your debt will get you closer to being debt-free. This will lead to financial health and will help you plan your future financially.

What you need to know

All creditors and debt collectors must always follow OFT (Office of Fair Trading) debt collection guidance. There are consumer protection rules that will help you tackle harassment by your creditors. The OFT and trading standards have the power to take enforcement. Therefore, if creditors are found guilty of the offense of harassment, they can be fined or imprisoned.

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