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What is a Collection Agency?
Understanding the Entire Debt Collection Process
Working With a Debt Collection Agency
Legal Credit Collection Services
Collection Agency Laws Offers Consumers Protection
Overall Process of a Commercial Collection Agency
What is a Collection Agency?
One of the main facets of the American economy, or any economy for that matter, is the availability of credit. While it is simple to make necessary purchases each month without credit, such as groceries, gas for the car, or utility bills; bigger purchases require credit of one type or another in order to be completed. Buying a home, a car, or receiving medical services are just a few examples of products or services that are often paid for initially with credit, allowing debtors to repay the value over time. However, when a debtor becomes unable to repay their debt and falls behind on their payments a collection agency is often brought in to try and resolve the problem between a creditor and debtor.
Collection agencies exist and operate in three different manners. These different collection agencies often conduct business in drastically different manners depending upon their direct or indirect involvement in the situation. The three types of collection agencies are:
First party collection agency
Third party collection agency
Debt purchasing agency
A first party collection agency is a department within or related to the creditor who is owed money by a debtor. Agents in this party are usually the first to work on a debt case, contacting debtors in hopes of resolving debt issues. Because these groups have bad direct contact with the debtor as a customer and a directly related to the creditor, they tend to conduct business in a constructive manner in order to avoid alienating the debtor.
First party collection agencies will often work for several months to resolve a credit dispute with a debtor before turning the case over to another party. In many cases the creditor will turn the case over to a third party collection agency. This group will take over the business of contacting the debtor and trying to arrange for repayment of the debt. Third party groups agree to a fee with the creditor for their services, but will not charge the creditor for their service until the debt has been repaid.
If a first party collection agency decides not to turn the case over to a third party collection agency and wants to instead just rid themselves of the issue, they have the option of dealing with a debt purchaser instead. Debt purchasing agencies buy the debt from a creditor for a reduced cost. This allows the creditor to rid themselves of the case and write off the remainder of the debt. A debt purchasing agency will then purse the debtor for the full amount of the debt and even charge int