Collection Agency
A collection agency is understood as another party, a third
party, that acts as a representative of any business requesting
such representation in order to collect an unpaid debt. Let's
face it, businesses are in whatever chosen market to make money,
not to lose it, and in some instances it becomes necessary to
hire a third party to actively pursue unpaid debts. A collection
agency will sometimes collect debts for businesses or lenders
and in other situations, they purchase unpaid debts so that the
debt can be collected and the money then goes to the collection
agency.
If a collection agency doesn't buy the entire debt from a
business or a lender, they may actively pursuit debts for a
commission of the collected funds. The commission will obviously
vary from one collection agency to another - an agreement
between the business and the agency will be established before
any debt collection action is taken. Typically, a debt agency
will follow up with consumers that have not paid certain bills
with an onslaught of telephone calls and multiple letters.
A debt agency is required to abide by certain laws. For example,
they must always maintain a person's privacy, whether they have
contacted the individual by mail or by phone. Letters must
remain discreetly addressed and messages that explain the nature
of a debt cannot be left with anyone but the person that owes a
particular debt. A debt collector can continue to contact a
debtor for as long as they like, as long as they abide by the
laws enacted. If a debtor fails to pay their obligation or they
do not respond to the initial actions of the debt collector, the
debt collector may attempt to follow through with legal steps
like a law suit and reporting of the debt to all of the major
credit bureaus.
All debt collecting agencies must abide by the Fair Debt
Collection Act, which specifically defines the measures that any
debt collecting agency can take in terms of trying to retrieve
monies. Although there are certain solutions that debt
collection agencies can engage in, such agencies are limited in
what they can and cannot do. For instance, an agency cannot
jeopardize one's employment, nor can they simply take someone's
property because they owe money for a bill. Finally, there is no
longer any such thing as debtor's prison, so going to jail for a
delinquent bill is not an option.
Lenders use debt collecting agencies in an effort to minimize
their liabilities. Millions of dollars each year are lost due to
unpaid debts. Thus, lenders and businesses make every effort to
collect on outstanding debts with the help of professional debt
collecting agencies. In doing so, the hope is to keep their
businesses out of the red and into the black. Many outstanding
bills pertain to credit card charges and medical billing and the
losses are great and grow greater for such businesses each year.