There are, at least, three sources of collection letters: from the original creditor, the collection agency, and then from an attorney (hired by the creditor or the collection agency).
Several weeks after a bill is not paid, the consumer can expect the creditor to write a polite letter saying that they did not receive the payment, that perhaps the due date was overlooked, or maybe the consumer already sent the payment a little before this letter, and if that's the case - they apologize and thank you for the prompt payment.
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If it so happens that the first letter was not replied to, the consumer would receive a second letter, and it would still carry a polite tone, but this time, it would be asking for an explanation for the late payment.
If the consumer fails to, once again, address the letter, a third or even a fourth and fifth one should be expected - and those letters would contain a tougher tone and warnings about the effect of delayed payment on the credit score, which are: the delinquency would be reported the credit bureaus, the possible cancellation of credit privileges, the account being sent to a collection agency, or a judgment lawsuit.
Original creditors have an in-house collection department but when accounts are not paid for 4-6 months, they are usually passed on to a third party collection agency that is if they are unlike some creditors who are aggressive in suing for judgment, which could be any of the following: wage garnishment, property lien, or bank levy. (Note that creditors would be violating an FDCPA law if they threaten to take legal action with no intention of carrying it out.) If that happens, the consumer may sue the creditor, instead of the other way around.
The consumer, if sued, can inform (or threaten) the collectors that they would file bankruptcy. The creditors usually do not like to hear such threats because a bankruptcy is tedious and costly. Not only that, if the consumer is approved for a Chapter 7 bankruptcy, the creditors might not get any of the debt back and so if the consumer knows how to negotiate, it would be a win-win situation for both parties. The consumer must keep in mind that all that the original creditor really wants is to get back what was owed them, and they usually would not choose for the consumer to file bankruptcy (where they get nothing), over a repayment plan or a settlement (where they get at least a portion of the debt).
Even if the consumer files bankruptcy, there is a mandate for a credit counseling session that would inform the consumer of bankruptcy alternatives.
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