Debt collection agencies are used by creditors that needs to collect money when the they don't have the time, resources or patience to effect collections on their own. Collection agencies are experts in getting people to resolve money issues, they have trained staff that specializes in debt negotiation and skip-tracing. This training covers a broad range of FDCPA, legal and debt collecting skills as well as a proven process for going after accounts.
As a creditor, if you decide to hire an collection agency, you pass the obligation of collecting the debt to them. Normally, if the agency recovers the money they will only keep a percentage of the amount collected as payment.
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.
Purchasing old debts is a big business. The collection agency is hoping that you would rather pay than get sued.
All collection companies are governed by federal laws (FDCPA) and collection agencies are not in the business of collecting fraudulent debts. However, when acting on behalf of a legitimate creditor they will take all necessary steps to enforce the collection of overdue accounts, including going to court on behalf of the creditor and reporting to the credit bureaus.
You should use a collection agency when -
you know the debtor has the ability to pay the debt is due there are no announced reasons for not paying
A debt collection company will approach the situation through a multi-stage letter writing campaign which can be effective, if occasionally slow, but it may not lead to recovery when -
the debtor has or thinks he/she has a valid defense the amount owed is disputed in full there is faulty product the debtor's solvency is in doubt or there is the possibility of bankruptcy
If any of these circumstances occur, the creditor should for their own legal protection retain control of critical decisions such as if and when to litigate, what attorney to retain and any other decisions made prior to or during litigation. This is particularly important where the creditor has a long term interest in retaining the customer as his client. Not retaining control of critical decisions and proceeding without the advice of an attorney could leave the creditor open to adverse legal liability.
When the creditor does not wish to do additional business with the client and the creditor is not interested in the outcome of a debt collection, beyond getting his money back, they can sell the debt to a debt buyer.
As a creditor, if you decide to hire an collection agency, you pass the obligation of collecting the debt to them. Normally, if the agency recovers the money they will only keep a percentage of the amount collected as payment.
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.
Purchasing old debts is a big business. The collection agency is hoping that you would rather pay than get sued.
All collection companies are governed by federal laws (FDCPA) and collection agencies are not in the business of collecting fraudulent debts. However, when acting on behalf of a legitimate creditor they will take all necessary steps to enforce the collection of overdue accounts, including going to court on behalf of the creditor and reporting to the credit bureaus.
You should use a collection agency when -
you know the debtor has the ability to pay the debt is due there are no announced reasons for not paying
A debt collection company will approach the situation through a multi-stage letter writing campaign which can be effective, if occasionally slow, but it may not lead to recovery when -
the debtor has or thinks he/she has a valid defense the amount owed is disputed in full there is faulty product the debtor's solvency is in doubt or there is the possibility of bankruptcy
If any of these circumstances occur, the creditor should for their own legal protection retain control of critical decisions such as if and when to litigate, what attorney to retain and any other decisions made prior to or during litigation. This is particularly important where the creditor has a long term interest in retaining the customer as his client. Not retaining control of critical decisions and proceeding without the advice of an attorney could leave the creditor open to adverse legal liability.
When the creditor does not wish to do additional business with the client and the creditor is not interested in the outcome of a debt collection, beyond getting his money back, they can sell the debt to a debt buyer.
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