The agency will therefore acquire a percentage of the debt that is successfully collected; on occasion known in the industry as the “Pot Fee” or potential fee upon successful collection. This does not of course have to be upon collection of the full balance and usually this fee is paid by the creditor if they call off collection efforts before the debt is collected. The collection agency makes money only if money is collected from the debtor. Depending on the class of debt the fee ranges from 10% to 50%.

Certain agencies propose a flat fee, typically $10.00, “pre-collection” or “soft collection” service. The service sends a string of increasingly high priority letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and negative credit report. Depending on the circumstances of the contract, these accounts may transition to “hard collection” status at the agency’s regular rates if the debtor does not reply.

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In the United States, consumer third-party agencies are governed by the Fair Debt Collection Practices Act of 1977 (FDCPA). This federal law is governed by the Federal Trade Commission or FTC. This act limits the hours during which the agency is permitted to contact the debtor and prevents communication of the debt to a third party. It also prohibits false, deceptive or misleading representations, and prohibits the agency from making threats of actions the agency cannot lawfully or does not intend to take.

In the United Kingdom third party collection agencies that pursue debts regulated by the Consumer Credit Act must themselves hold a Consumer Credit Licence; this is a requirement under the Consumer Credit Act 1974.

Licenses are distributed and regulated by the Office of Fair Trading a government body which protects consumers from wrongful traders. In order to retain their license third party agencies must work within the framework outlined within the 2003 fair debt collection guidance.

Rapid Recovery Solution is a New York debt collection agency.

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In most affairs lenders are within their rights to search for payment. This includes situations where the borrower is careless in their responsibilities and then in the end default on their financial obligations, and or if the borrower simply needs additional time due to rough financial circumstances and strain. These above situations represent instances in which the lender is not earning his due payments from the borrower when they began with a reasonable expectation of being paid back in an adequate time frame. No matter the reason in these cases, the lender in question is legally within their rights to seek payment that they are due.

In these situations, the majority of the time lenders have no other alternative but to become involved with a collection agency. The goal of collection agencies is to recover and collect all of the monies that are unsettled to their clients (the lenders). Due to the Fair Debt Collection Practices Act, collection companies can no longer act rashly and with disinterest for the consequences of their actions when making an effort to recover monies for their clients.There are several clauses that come along with the Fair Debt Collection Practices Act as enacted in 1978. These clauses both protect debtors and enable collection companies to strongly pursue valid debts.

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Even if a debtor advises a collections representative to terminate all further contact with him there are other means by which a debt collection representative may aim for the valid debt. For example, under the FDCPA, while the collection rep must agree with the debtors request to cease any further contact with them, they are also perfectly within their rights to make the debtor aware that they intend to pursue the debt via legal channels through an attorney.

If the collection agency responsible for recovering the delinquent account cannot communicate with or cannot reach the debtor, then they are legally allowed to contact third parties related to the debtor. However, under the FDCPA there are some boundaries to contacting third parties. First and foremost, the collection rep cannot harass the third party or be non-courteous. Also importantly, the collection rep cannot violate the right of privacy of the debtor by disclosing the nature of the call to this third party.

Among guidelines for collection agencies to adhere to, the Fair Debt Collection Practices Act also has a penalization system in place for those collection companies that do not adhere with the aforementioned stipulations. These penalties against collection agencies found to be in violation of the FDCPA include: fines; license revocation; and even legal actions.

At first glance it appears as though the guidelines of the Fair Debt Collection Practices Act are strongly skewed toward the debtor. However, these rules also protect the debt collection agency by helping them steer to wards fair practices and policies in a courteous and professional manner. Without the FDCPA, the unprofessional behaviors of some select few collection agencies would go unchecked and thus would undermine the entire reputation of the business of debt collection.

Mallory McGuinness works for a collections agency that works with a debt collection lawyer. She also does pieces on business and finance, the credit industry and collections agencies.

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Ask for the name of the person calling, the agency, the creditor, and the agency’s address and fax number. You have the right to tell a collector over the phone that you want all future contact to be in writing. Follow up all requests with a written request.

Try to remember that if you ask the collector not to contact you at all it the agency has the authority to contact you once more to inform you how it plans to proceed. Another request that can be made is that you are the only person that should be contacted. It may be a good idea to keep a file including dates and details of phone conversations and when you mail out or receive letters.

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If you do send any correspondence to the collections agency do this by Certified Mail, Return Receipt Requested. This ensures that the letter reached the collector, giving you a signed receipt as proof. If you negotiate a re-payment plan over the phone, ask for the terms of the plan in writing. Any promise to remove or adjust credit history should also definitely be documented.

Ensure that you pay the right party; payments should be made to the collections agency, not the creditor, unless otherwise instructed to do so. Look over the amount you are being asked to pay carefully. Obtain an assessment of any interest, fees or charges that have been added.

If you think that your collector is harassing you, be sure to complain to the agency and keep this complaint in your file. Finally, never ignore a collector even if you feel that the debt isn’t yours; they will continue to contact you and it may mean more trouble and time in the long run.

Mallory Megan works for a debt collection company. Also, she does articles on business and finance, the credit industry, and collection agencies. Get a totally unique version of this article from our article submission service

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