What can a Creditor Really Do?

Debt Collectors

Most debt collectors are paid a percentage of what they can get you to pay. They will do and say almost anything to get a payment. Some will threaten to arrest you, garnish your wages, or call your parents or employer. They tend not to want to listen to your reasons why you are not paying. But there is no law that makes you have to listen to their threats or harassment.

What can a debt collector or creditor really do?

A debt collector can do little more than demand payment. If the creditor has not taken your house, car, or other property as collateral on a loan, then legally the creditor can only do three things:

  • Stop doing business with you.
  • Report your default to a credit bureau (which will be unavoidable when you cannot pay most of your debts on time).
  • Sue you in court. Although the threat to sue you may be very upsetting, it is not nearly as serious as you might think. Many creditors do not follow through on their threats, even if they do follow through and happen to win the judgment, only 27% of all judgments are collected.