What is a Collection Angeny and how do I know if I need one?

by JR Rooney

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 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.

Some agencies will buy the accounts but most will not. The debtor does not actually owe the collection agency any money but they still owe the debt to the original creditor. By law the collection agency must provide, if asked, proof of the debt (known as validation of debt) that they have been assigned the account for collections on behalf of the creditor.

From time to time collection agencies buy old accounts hoping that the debtor is in a better position today to pay the bill.

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.

This is when you hire a debt collection agency –

you know the debtor has the ability to pay the debt is due there are no announced reasons for not paying

A debt collection agency will approach the issue through a multi-stage 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 circumstances occur, the creditor should for their own legal protection retain control of critical decisions such as if and when to litigate, what attorney to retain and any other decisions made prior to or during litigation. This is particularly important where the creditor has a long term interest in retaining the customer as his client. Not retaining control of critical decisions and proceeding without the advice of an attorney could leave the creditor open to adverse legal liability.

When the creditor does not wish to do additional business with the client and the creditor is not interested in the outcome of a debt collection, beyond getting his money back, they can sell the debt to a debt buyer.

About the Author:
VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)

Tags:

Author:

This author has published 28 articles so far.

Comments are closed