Debt collection agencies act on behalf of creditors to collect debts when the creditors don't have the time or resources to chase down severely overdue debts for themselves. Collection agencies specialize in this kind of work which means they have staff that specializes in debt collection, which covers a broad range of legal and negotiating skills, and a streamlined process for pursuing accounts.
As a creditor, when you hire a collection agency, they are assigned the job of collecting the debt. Normally, if the agency is successful in debt collection the collection agency will retain a percentage of the amount collected as payment for services.
Typically, collection agencies do not take over the debt. The debtor does not actually owe the agency any money. It still owes to the creditor. But the collection agency will provide evidence (known as debt validation) that they have been empowered to collection the debt on behalf of the 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.
This is when you hire a debt collection agency -
the debtor has the ability to pay but ignores you the debt is past due there is not a valid dispute
A debt collection company will attempt to collect via a letter writing campaign which can be effective, if occasionally slow, but it may not lead to recovery when -
the debtor has or thinks he or she has a defense the amount owed is disputed there is an unrelated adverse claim the debtor's solvency is in doubt or there is the possibility of bankruptcy there is security to recover or a possible prejudgment remedy
If any of these issues occur, the creditor should for their own legal protection retain control of important decisions such as if and when to litigate, what attorney to use and any other decisions made prior to or during suit. This is very important where the creditor has a long term interest in keeping the customer as his client. Not retaining control of such decisions and proceeding without the advice of a qualified attorney could leave the creditor open to counter suit.
The option exists where the creditor does not wish to do additional business and the creditor is not interested in the outcome of a debt collection, beyond getting his money, to sell the debt to a debt purchaser. - 15254
As a creditor, when you hire a collection agency, they are assigned the job of collecting the debt. Normally, if the agency is successful in debt collection the collection agency will retain a percentage of the amount collected as payment for services.
Typically, collection agencies do not take over the debt. The debtor does not actually owe the agency any money. It still owes to the creditor. But the collection agency will provide evidence (known as debt validation) that they have been empowered to collection the debt on behalf of the 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.
This is when you hire a debt collection agency -
the debtor has the ability to pay but ignores you the debt is past due there is not a valid dispute
A debt collection company will attempt to collect via a letter writing campaign which can be effective, if occasionally slow, but it may not lead to recovery when -
the debtor has or thinks he or she has a defense the amount owed is disputed there is an unrelated adverse claim the debtor's solvency is in doubt or there is the possibility of bankruptcy there is security to recover or a possible prejudgment remedy
If any of these issues occur, the creditor should for their own legal protection retain control of important decisions such as if and when to litigate, what attorney to use and any other decisions made prior to or during suit. This is very important where the creditor has a long term interest in keeping the customer as his client. Not retaining control of such decisions and proceeding without the advice of a qualified attorney could leave the creditor open to counter suit.
The option exists where the creditor does not wish to do additional business and the creditor is not interested in the outcome of a debt collection, beyond getting his money, to sell the debt to a debt purchaser. - 15254
