Debt Collection Agency vs. Debt Settlement: Key Differenceswoman hand counting expenses with smart phone and credit cards,bills on desk

Debt Collection Agency vs.

When it comes to dealing with debt, many people may feel overwhelmed and unsure of the best course of action. Two common options for managing debt are using a debt collection agency or pursuing a debt settlement. While both can help individuals address their financial obligations, there are key differences between the two approaches.

A debt collection agency is a third-party company that creditors hire to collect outstanding debts from consumers who have fallen behind on payments. These agencies typically use aggressive tactics such as phone calls, letters, and even legal action to recover the money owed. They may also report delinquent accounts to credit bureaus, which can negatively impact an individual’s credit score.

On the other hand, debt settlement involves negotiating with creditors to reduce the total amount owed on a debt. This process usually requires working with a professional negotiator who will communicate with creditors on behalf of the debtor. The goal is to reach an agreement where the debtor pays a lump sum that is less than the original amount owed in exchange for having the remaining balance forgiven.

One key difference between a Bison Credit Solutions calgary debt collection agency settlement is how they approach resolving debts. A collection agency focuses on collecting as much money as possible from borrowers by any means necessary, often without considering their financial situation or ability to pay. In contrast, debt settlement aims to find a mutually beneficial solution that allows borrowers to repay their debts while avoiding bankruptcy or further financial hardship.

Another important distinction between these two options is their impact on an individual’s credit score. Working with a debt collection agency can result in negative marks on one’s credit report that can stay there for up to seven years, making it difficult to qualify for loans or lines of credit in the future. On the other hand, successfully completing a debt settlement program can actually improve one’s credit score by reducing overall debt levels and demonstrating responsible financial behavior.

In addition, there are potential legal implications associated with each option. Debt collection agencies must follow strict guidelines outlined in federal laws such as the Fair Debt Collection Practices Act (FDCPA) when attempting to collect debts from consumers. Failure to comply with these regulations can result in fines or legal action against the agency.

Overall, choosing between using a debt collection agency or pursuing a debt settlement will depend on individual circumstances such as total amount of debt owed, income level, and willingness to negotiate with creditors. It’s important for anyone struggling with overwhelming debts to carefully weigh their options and seek advice from financial professionals before making any decisions that could have long-term consequences for their financial well-being.

Bison Credit Solutions
6125 11 St SE #260, Calgary, Alberta, T2H 2L6
(403) 263-7670

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