In the great recession, many borrowers became insolvent or claimed default so where that unpaid debt actually went. Sometimes you are also unable to pay for your debt and thinks that what will happen if I become unable to pay for your debt. Getting to know what will happen with you when you became unable to pay, or in other words what will happen to your debt when it became unpaid is really important for you to pay on time and according to the agreed structure.

Bad Debt collection Methods

Mostly creditors give your unpaid debt account to debt collectors. Paying debt on time is really important. Even if you become late to pay on time, you need to arrange some agreement or payment structure with your original creditor. Dealing with the debt collectors never ended in good experience. There are normally three kinds of practices creditors adopt to charge off your unpaid debt. Your debt would be assigned to which category mostly depend on your periodic payment pattern, your credit score rating, total amount of debt etc. These methods are mentioned below in depth;

1. Third party bad debts collection agencies

Most of the lenders shift your account to third party bad debt collection agencies. These collectors would contact you through your telephone and your e-mail. This alignment would mostly remain for sixty to ninety days period. If the debt collector would get you to pay full loan or even a little part of loan, he would get a certain percentage fee. You can pay you debt to third party collector in following form;

1. Pay back the full amount of loan in lump sump

2. Make an agreement to pay monthly installments

3. Discuss some agreement to pay lesser amount than your actual loan and pay that at once or in monthly installments.

2. Bad Debts assigned to attorney firms

Some lenders assigned debts to attorney firms and they prefer it that way. So, your unpaid debt might be shifted to attorney firms and them mostly works like third party debt collection agent. They may call you and or send you e-mail to pay back your money.  They may sue you in court for not paying debt back according to the fair debt collection effort. A lawsuit may never come to you but you should be really vigilant while dealing with the attorney firms especially in-state attorneys.

3. Bad debts are sold to investors

In today’s market, billions of worth bad debts are sold to the investors. This phenomenon started after the saving or loan crisis in 1980’s. Investors were willing to buy bad debts securities on cheaper rates with the expectation to earn profit many times greater than their original investment. These investors take a lot of risk in an anticipation of getting a lot of gain in future. Today, debt investors are in huge numbers in the market, they purchase recently charge off accounts in a large portfolio and expect the maximum gain.