Going into collections
Depending on the type of debt owed, collections can affect you in different ways. If your 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 the debt from you. Instead, the collections company that your debt was sent to, would pursue the debt and try to collect money from your. If your debt was secured, such as an auto loan and you default, then the lender might repossess your car, sell it at auction, and sell the remainder of debt you owe to a collection company. Lenders can collect money from debt in the following ways:
Contact you on their own and ask for payment using their internal collection department.
Hire a Collection agency to try and collect
For revolving debt, such as credit card debt, the credit card company could sell you 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.