Going Into Collections
Depending on the type of debt owed, collections can affect you in different ways. If you debt is unsecured, such as credit card debt, and you default on your payments with that debt sent to collections, the credit card company would stop trying to collect that debt from you. Instead, the collections company that your debt was sent to, would purse the debt and try to collect money from you. If you debt was secured, such as a auto loan and you default, then the lender might repossess your car, sell it at an auction, and sell the remainder of debt you own to a collections company. lenders can collect money from debt in the following ways:
Contact you on their own and ask for payment using their internal collections depatment.
Hire a collection agency to try and collect.
For revolving debt, such as credit card debt, the credit card company could sell your debt to a collection agency which would then try to get the money from you.
For installment loan debt, such as an auto loan, the lender may repossess the car, sell it auction, and then sell the remaining debt to a collection agency.