Quick Guide to the Typical Arizona Debt Collection Timeline (And Why You Should Care)

If you are dealing with past due debts you no-doubt understand the confusion of what company is trying to collect what debt on behalf of who? (If that makes sense?).  Well before a debt ends up in the hands of a junk debt buyer like Portfolio Recovery or Midland Funding it passes through a series of debt collectors.

Here is the typical collection timeline:

Original Creditor to Primary Debt Collector (90-120 days):  Once a debt goes unpaid for about 3-4 months the original creditor will often place the debt with a primary debt collector to try and get payment.  If they can’t secure payment it will likely be passed off to a secondary collector.

Primary Collector to Secondary Collector (90-120 days):  After the primary collector works the file for 3-4 months if payment isn’t made on the account it will likely be passed off to a Secondary Debt Collector.  If payment still hasn’t been secured it will likely be passed off to a third debt collection company.

Third Debt Collector/Charge Off:  After about 4-6 months go by without payment the account can be shipped off to a third debt collection company who will work the account for a while or the original creditor will go ahead and “charge-off” the account.  It is important to understand that just because a creditor “charges-off” an account does not mean that they can’t still try and collect on it or that they can’t sell it to a junk debt buyer.  And in fact, selling is what many creditors do…

Debt Buyer Purchases Charged Off Debt:  At this stage the accounts have been pooled together and sold at a huge discount to junk debt buyers like Portfolio Recovery.  The typical selling price is about 4 cents on the dollar.  That means an account that has a $10,000 balance will likely be sold for about $400!  Good work if you can get it!  In most states the junk debt buyer is then permitted to sue you for the total balance that is owed.

Collection Attorney Files Lawsuit:  After the junk debt buyer purchases the account they will then ship it off to a debt collection attorney who will file a lawsuit against the consumer (i.e. you).

So, if you have been confused as to who is calling you and why they are calling you it is with good reason.  There could be several debt collection companies and a lawyer’s office all involved in trying to collect on a debt.

Why Does Any of This Matter to You?

The reason why this is relevant to you is that collection tactics and your corresponding strategies are impact by whatever stage the account is currently in.  Further, the longer the account has been in collections the less they will likely agree to in order to settle the account.  One important thing to understand is that even though there are several debt collection companies involved in the early stages, once a case goes to trial and is fully adjudicated you will not have to worry about the case coming back to cause you grief.