Some people, for one reason or another, either forget or fail to pay a bill for a service they have received. In turn, the service provider may terminate the service contract leaving the consumer without service. This usually sparks tension between the consumer and the service provider. Many people assume that the company will eventually “write-off” the debt and they will be released of responsibility to pay for the debt. But in the meantime, the consumer may not be aware of what actions the service provider is taking until it is too late.
On The Side of the Service Provider
A company that has provided a service and failed to receive payment from the consumer has the right to collect on the debt. Unless the consumer has taken a formal debt management strategy, such as debt elimination or restructuring through bankruptcy, the company may proceed with collection efforts. Typically, the service provider will turn over the debt to a collections agency after the account has become delinquent for at least 30 days. Many agencies will contact the consumer requesting the account to be paid in full. If the company decides to write off a debt, they send the information to the IRS to inform them of a loss for that tax period. This does not mean that the debt has been eliminated and is still, legally, available for collection.
The Rights of the Consumer
The consumer has the right to contact the service provider to dispute the charges. Disputing charges with a service provider is often a tedious task involving many phone calls and paperwork. The consumer may find it easier to negotiate a repayment plan that suits their budget. However, the service provider maintains the right to negotiate a “settled” repayment amount if they choose and is not required to agree to any repayment plan. If a service provider agrees to “settle in full”, they will not be receiving the full amount that is owed. Typically, settling in full means the company agreed to take less than the amount owed in efforts to gain payment for at least a portion of the debt. Be aware that many collection agencies operate with many tricks to obtain full or partial payments, and the consumer is responsible for protecting themselves from fraudulent collections. The Texas Debt Collection Act protects consumers from fraudulent and abusive collections. It is best to check with your state about the limitations on debt collections before you decide how to manage the debt collection.