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What Is A Collection Agency And How Do I Know If I Need One?

Debt collection agencies act on behalf of creditors to collect debts when the creditors don’t have the time or resources to chase down severely overdue debts for themselves. Collection agencies specialize in this kind of work which means they have staff that specializes in debt collection, which covers a broad range of legal and negotiating skills, and a streamlined process for pursuing accounts.

As a company that is owed money you can hire a collection agency. They get assigned the task of collecting the account. Most agencies, when successful will take a small portion of the collected amount. Be careful of firms that want money upfront.

Most collection agencies do not buy the debt outright. The debtor does not actually owe the agency the money. It still owes the debt to the original creditor. The collection agency will provide, if asked, proof (known as validation of debt) that they have been placed into collections on behalf of a creditor.

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Purchasing old debts is a big business. The collection agency is hoping that you would rather pay than get sued.

Every US based collection agency is subject to the F.D.C.P.A and is not permitted to collect on fraud accounts. They will take every legal remedy available to enforce the collection of accounts that are outstanding. This includes going to court.

You need a debt collection company when – The debtor has the ability to pay but ignores that the debt is past due there is not a valid dispute.

the debtor gives you broken promises The debtor refuses to pay voluntarily they have not filed bankruptcy

The amount past due is disputed when there is an unrelated claim against you, the debtor’s solvency is in doubt or there is the possibility of bankruptcy that offers security to recover or a possible prejudgment remedy

If any of these issues occur, the creditor should for their own legal protection retain control of important decisions such as if and when to litigate, what attorney to use and any other decisions made prior to or during suit. This is very important where the creditor has a long term interest in keeping the customer as his client. Not retaining control of such decisions and proceeding without the advice of a qualified attorney could leave the creditor open to counter suit.

The option exists where the creditor does not wish to do additional business and the creditor is not interested in the outcome of a debt collection. Beyond getting his money, he may try to sell the debt to a debt purchaser.

Mallory Megan works for a collections agency that works with a debt collection lawyer. Also, she does stories on business and finance, the credit industry and collections agencies. Get a totally unique version of this article from our article submission service