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The Debt Collection Process
The Debt collection process follows a fairly standard path and yes, while there are some exceptions, here's generally the path your bills will take down the long and twisted road of debt collection. Bill Collecting The Easy Way

The first step in the bill collection process is easy; your creditors mail you a bill every month. Most of the time we pay them on time but sometimes we don't, and that's where the following, not so easy steps, come into play.

The Bill Collection Process Step #1 The Original Creditor
If you fall behind on your payments you're going to receive some friendly reminders to pay your bill. These may start with a letter saying this is a friendly reminder you must have forgotten to pay your bill, please pay it. You may have even received a letter like this before; who knows it could have happened. You may even get a pleasant phone call from a recording or a real person being very nice about it like they are almost sorry to bother you.

A Little Something Extra
The next thing you might notice is that there's a little something extra in your next statement and not just an offer to buy something you don't need with extra savings if you put it on your charge card and mail it back with your payment, but I digress. You're something extra will be a little token of their appreciation like a late fee, an over the limit charge and the ever popular higher interest rate of up to 29.9%. With an interest rate that high you will be reminded for months to come about the payment you missed. Then the letters start to get a little more interesting and maybe not quite as nice.

A Little More Urgency
If you’re bills continue to go unpaid for a couple of months the frequency and the tone of the calls and letters is going to change. They may call often enough that you would start to recognize a calling pattern and even come to expect their call. Heck, you may even get to know your bill collector on a first name basis. The amount of pressure they put on you may vary by their personality. Some are the “good collectors” and some are “bad collectors”. They may want to know personal information like how your job is going and if you have any relatives that can help you out. This process is likely to continue for about three to four months.

Now You're Going To Really Get It - The Charge-Off Threat

Finally you're going to get the ultimate threat from you original creditor, "We're going to charge off your account"! Since most folks don't understand what this means is scares them and that's what it's intended to do. Generally what happens when a debt is charged off is the original creditor is giving up on collecting the debt. This usually happens after your bill goes unpaid for six months. This will put a real bad mark on your credit report, and that means you may not be able to get a credit card that charges you outrageous rates and expects you to make minimum monthly payments for the next thirty years.

Having trouble figuring out what the bad part is? How about this for terrible, your original creditor will probably write off your bad debt off their income tax, so they pay less in taxes. Then they will sell your debt in the multi-billion dollar secondary debt market and make money on the account. So if your "friendly" bill collector sounded upset when thy called it's because they work on commission and they're losing the opportunity to call and collect from you. They probably won't tell you that when your debt is charged off your late charges and over-the-limit fee will probably stop. So quick now, what's the bad part about your account being charged off? I DON'T KNOW EITHER.

The Bill Collection Process Step #2 The Collection Agency

Now is when the real fun begins. Please excuse my sarcasm. Out of the entire debt collection process most people consider this one the nastiest. So let's take a look at the The Collection Agency


"Thank you for your help and resources. I had no idea how to handle my creditors until I found your website. Yes, there is light at the end of the tunnel!

(2nd Grade School Teacher, Washington)

"I appreciate your helpful information. We were able to work out a deal that is a win win situation for me and my debt collector's. Thank you so much.
Julie T.
(Receptionist, Texas)


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Debt Calculator

See how long it will take for your debt to get paid off with one of these four options. We have listed a standard debt amount as a default on the debt calculator. You will need to enter your current personal or business debt amount below to see what your debt payoff amounts will reflect.

What's Best For You: Minimum Payments?

Debt Consolidation?

Credit Counseling? Debt Settlement?
Total Unsecured Debt $30,000.00 $30,000.00 $30,000.00 $30,000.00
Months To
Get Out Of Debt
430 60 60 36
Interest Rate 18.9 % 12 % 10-12% Ave None
Total Interest Paid $49,978.53 $10,040.01 $21,300.00 None
$900.00 $667.33 $855.00 $458.33
Total Cost
To Be Debt Free
$79,978.53 $40,040.01 $51,300.00 $16,500.00
Monthly Payments   Months To Get Out Of Debt   Total Cost To Be Debt Free
Minimum Payments Debt Consolidation Credit Counseling Debt Settlement
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Unsecured Debt:
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PLEASE NOTE: This calculator gives you an estimate of how much it will cost you to get out of debt, how long it will take and how much your monthly payment may be with the different options to pay off your debt. Keep in mind "Minimum Payments" assumes you NEVER make any further purchases on your credit cards and the credit card companies NEVER raise the interest rate on your cards in the future from the rate calculated above. The "Debt Consolidation Loan" example is usually only possible when taking out an "equity line of credit" or "second mortgage", which involves securing your unsecured debt with your home. This is a very risky option for most people because the home could be foreclosed if you cannot make the payments.