A Collection Agency is an organization that is tasked with collecting debts on behalf of creditors. Its goal is to obtain payment for a client’s debts. As the name suggests, this agency is dedicated to this task. It does so by pursuing unpaid debts on behalf of a client. The services of a collection agency are often more efficient and effective than the efforts of a business owner or creditor. But how does one find a good collection agency?
Unlike a traditional lender, a collection agency does not make a profit from collecting debts. Instead, they pursue payment on a portion of the debt and sell it to another agency. In a recent survey, the Federal Trade Commission found that a collection agency paid about $4 per dollar for a delinquent account. The constant reselling and sale of debts has caused some to doubt the accuracy of the information they have on file about the original creditor.
If your debt is in collections, it is because the original creditor has foregone collection. Most lenders will try to collect debts before writing them off. That means that a debt may be several years old, a few months late, or even a few months late. And, if the creditor receives a judgment against the borrower, the agency can continue to pursue the account indefinitely. Whether your account is owed a few dollars or a few thousand, a collection agency can pursue the debt you owe.
There are two types of collection agencies. First-party and third-party. Obviously, a third-party agency is a separate entity, with its own set of requirements. While a third-party agency must follow certain standards to collect your debts, a first-party agency has a greater incentive to pursue a customer’s debt and maintain a positive relationship. A first-party collection agency will work diligently to collect a debt that has been delinquent for several months or years.
In the United States, a collection agency can purchase your debt from the creditor. The purpose of this is to collect as much of the debt as possible. Once the debtor is satisfied with the amount they owe, the agency will proceed with aggressive collections. A collection agency can also sell a debt to another collection agency if it cannot find the debtor’s address. But these agencies are very careful to protect the consumer and the reputation of the company they purchase from. These auctions, via sites such as debt collection agency are also available online.
A third-party collection agency will notify the debtor about the debt. They should include the debtor’s name and address, as well as a contact phone number. When a collection agency contacts you via phone, make sure to respond in writing to avoid misunderstandings. A letter from a collection agency should be legible. This way, you can dispute the debt without fear of losing your credit. In some cases, a written letter may be enough to stop the collection process.