Debt collection agencies are hired on behalf of creditors to collect money when the creditors don't have the time or resources to effect collections on overdue debts for themselves. Collection agencies specialize in getting people to pay, they have staff that specializes in debt collection and skip-tracing, which covers a broad range of FDCPA legal and debt negotiating skills, and a streamlined process for going after accounts.
As a company that is owed money you can hire a collection agency. They get assigned the task of collecting the account. Most agencies, when successful will take a small portion of the collected amount. Be careful of firms that want money upfront.
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.
Occasionally, collection agencies will purchase the debt from the creditor. However, usually all that the collection agencies acquire is the right to carry out the process of debt collection.
All collection agencies are governed by federal laws and no collection agency is, or wishes to be in, the business of collecting fraudulent debts. However, when acting on behalf of a legitimate creditor they will take all legal steps to enforce the collection of badly overdue accounts, if necessary going to court on behalf of the creditor.
You should use a collection agency when -
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 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 issues occur, the creditor should control all pertinent legal decisions such as if and when to file suit, what attorney to use and any other decisions made prior to or during the court action. This is crucial when 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 legal representative could leave the creditor open to counter suit.
The option exists where this is not the case and the creditor is not interested in the outcome of a debt collection, beyond getting his money, to sell the debt to a debt buyer.
As a company that is owed money you can hire a collection agency. They get assigned the task of collecting the account. Most agencies, when successful will take a small portion of the collected amount. Be careful of firms that want money upfront.
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.
Occasionally, collection agencies will purchase the debt from the creditor. However, usually all that the collection agencies acquire is the right to carry out the process of debt collection.
All collection agencies are governed by federal laws and no collection agency is, or wishes to be in, the business of collecting fraudulent debts. However, when acting on behalf of a legitimate creditor they will take all legal steps to enforce the collection of badly overdue accounts, if necessary going to court on behalf of the creditor.
You should use a collection agency when -
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 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 issues occur, the creditor should control all pertinent legal decisions such as if and when to file suit, what attorney to use and any other decisions made prior to or during the court action. This is crucial when 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 legal representative could leave the creditor open to counter suit.
The option exists where this is not the case and the creditor is not interested in the outcome of a debt collection, beyond getting his money, to sell the debt to a debt buyer.
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