Can A Collection Agency Sue for a Debt? The answer to that is a yes. But, the reasons behind this are a little more complex than that.
The ways of finance is based on a simple tenet: person has money, person spends money, person is happy. When the person needs to spend but does not have enough money, he borrows. Herein, the ways of finance becomes complex.
Borrowing money from a financial entity is called “getting a loan.” So that lenders can make sure that the borrower can pay their debt, lenders in many countries consult the person’s credit report. The credit report serves as a measuring stick of the risks involved in approving a loan for a particular applicant. Ideally, the person strives hard to get a good credit report so that the loan-getting process would not be a problem. Bad credit, however, is sometimes hard to avoid.
Bad credit is the inevitable result of a person’s inability to pay a previous loan or loans. This inability may be due to many reasons, some out of our control (like natural disasters or accidental errors in mailing). But then, the lenders, as a rule, see a bad credit standing as a no-no.
Solving debts and unpaid loans then become a responsibility of collection agencies or companies. Their goal is fairly straightforward–to make you pay.
As you may be aware, money owed to a company can negatively affect the way it is run. This makes sense if you can look at it on a person-to-person basis: if there are debts, then the lender’s way of living is affected, in terms of food, utilities and such. Unpaid debts a lending company in a similar way.
Debt collection can sometimes be a part of a company’s operation. However, in many countries, there are many legal considerations regarding debt collection, so usually credit card companies hire a separate collection agency. There is a category of debt collection which agencies refer to as “debt buyers”. These people pay the debts owed at a discounted price. Lenders usually do this to clear up their accounts. Having purchased the debts, debt buyers are now the ones who now make the borrowers to pay up. In a simple analogy, the process is similar to a generous uncle who pays your debt and later turns out not to be generous at all, demanding that you pay him for the trouble.
Can collection agencies sue for a debt? Yes, they can. However, collection agencies have to balance the amount owed and the cost of the lawsuit. If the debts are small, chances are the collection agency will not take the case to court.
However, suing can go both ways. Since this act is tantamount to harassment, there are accounts of people suing collection agencies, and even winning the said cases. In the US as in many countries, a bad or a good credit rating does not present permanent figures. Laws and government regulation may direct a big part of the financial world, but you should not let those prevent you from wanting to have a good quality of life for you and your family.
