Collection Agencies

Collection agencies are businesses that collect past-due bills and accounts receivable for other persons or businesses in exchange for a fee.  Collection agencies are referred to as third party agencies since they are not a part of the original contract between the merchant and the customer.  Debt collection agencies are utilized for collection of debt, collect nsf checks, collect past due invoices, collect medical bills, collect judgments and locate hidden assets including bank account searches.

Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, typically through letters and telephone calls.  Creditors typically send debts to a collection agency in order to remove them from their accounts receivable records; the difference between the amount collected and the full value of the debt is then written off as a loss.  Creditors may be able to garnish your wages in some states.

Debt collection agencies have a reputation for engaging in threatening behavior, harassment, and coercion.  Debt collectors who work on commission may be highly motivated to convince debtors to pay the debt, often to the point that they sound threatening to the debtors.   Collection agencies are required to provide a phone number which is free for the debtor to call.

Debt collectors have laws which control their activities.  Debt collection laws prohibit collectors from engaging in abusive behavior, and help open up the lines of communication between debtors and collection agencies.  Debt collection laws give you thirty days to dispute a debt.  

People may become debtors because of a lack of financial planning on their part or careless over-commitment.  Other people become debtors because of an unforeseen and uncontrollable event that disrupted their life.  Collection calls rely on repetition to motivate the debtor to pay.  As a debtor, remember you have the right to speak to the collector when it is more favorable for you.

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