Earlier this month, “Last Week Tonight” host John Oliver made television history when he orchestrated the largest one-time giveaway in history on his HBO program. But he didn’t give away a car to everyone in his studio audience, a la Oprah Winfrey from back in 2004, a stunt which gave away an estimated $8 million in prizes. No, instead Oliver did something a bit more unique – he forgave about $15 million in total debt from about 9,000 consumers. It was debt that Oliver bought for about $60,000 – less than half a cent per dollar – after he started his own debt buying company. But as you might imagine, Oliver has no interest in becoming a debt buyer, the giveaway was really the culmination of a scathing takedown on debt buyers and how unregulated the practice is – especially when many debt buyers are attempting to recoup significant medical debt, debt that people need to either take on or risk death in some cases.

What is Debt Buying (and Why is it Scary)?

It’s estimated that Americans owe a total of about $12 trillion in debt, $435 million of which is considered to be “seriously delinquent,” or 90 days or more past its due date. Such debt can also take a toll on one’s credit score. When a lender has “given up” to a certain extent on collecting debt, it has become common for them to sell it off at an extremely reduced rate to a debt buying company. This debt buyer can then go after the consumer in an effort to recoup the total amount owed, as they now have access to consumer names, social security numbers, phone numbers and other personal information.

Debt buyers are unlike a collection agency because they’re not working for a lender – they own the debt outright, and sometimes the lengths at which they’ll go to collect are extreme and possibly illegal. For instance, they’ll often harass people at home or at work, threaten violence or even contact their bosses at their places of employment.

And if they can’t get the debt through intimidation, they’ll file a lawsuit. In fact, in some American cities, debt buyers file more lawsuits than any other type of plaintiff.

As Oliver highlighted in “Last Week Tonight,” debt buying is a sleazy business. But what really makes it scary is how unregulated it is. In many U.S. states, for example, anyone can become a debt buyer. Oliver himself knows this because he spent $50 to create CARP, a debt buying company based in Mississippi, in order to buy the $15 million in medical debt that he forgave on his show.

Oliver forgave the debt that he acquired through CARP, but he’s probably the only debt buyer that has done so. But here’s to hoping his stunt on “Last Week Tonight” opened the eyes of policymakers that debt buying needs some significant reform.

For one reason or another, things happen. And when circumstances affecting one’s financial situation arise, consumers may find it difficult to keep up on things like credit card bills, phone bills and more. If there’s an issue making ends meet, a consumer may stop paying a certain bill. While this is never advised, like we said, things happen. After the creditor realizes payments are not being made, they’ll contact the consumer to let them know, but eventually, after three to six months of inactivity, the debt may be turned over to a collection agency. At this point, the credit bureaus will also be notified and you’ll likely see your credit score take a hit.

But you’re not done once the debt goes to collections. No, it’s only just begun – and things can get messy and confusing. With that said, this post will cover what to expect when a debt goes to collections:

What to Expect When a Debt Goes to Collections

  • Assigned vs. sold debts: Your debt is either assigned or purchased. When it’s assigned, the debt is simply turned over to collections with a contract to collect. When it’s purchased, the creditor has sold the debt outright to a collection company. No matter the situation, the collection company has motivation to collect, as they’re paid for results. For instance, agencies with assigned debts can keep up to 60 percent of what they collect. And there’s certainly motivation for an agency to collect if they’ve purchased the debt.
  • They work fast: As soon as a debt is passed on to a collections agency, you can expect to be hearing from them. Generally speaking, the earlier contact can be made, the better the likelihood of settling or collecting.
  • Collection agents can be ruthless: There’s a lot at stake when it comes to collecting debt, so an agent may revert to extensive – and possibly illegal – tactics as a way of collecting it. Make sure you know your rights when it comes to this, as you do have rights as a consumer. If collection agencies are breaking the law, they may be punished.
  • Assigned debts can be tricky: In the case of assigned debts, the collection agency is still taking barking orders from the creditor. So as they work to recoup what is owed, agencies can’t do anything without first checking with the creditor – they’re essentially just the middle man in things. For instance, an agency can’t sue you without the creditor’s authorization. Similarly, if you settle with an agency for less than what is really owed, nothing can be set in stone until the creditor agrees to the terms.
  • Negotiating: In most cases, you may be able to settle with an agency to repay less than the amount that is actually owed.