Understanding The Deal With Your Collection Agency

The term \”collection agency\” has often been considered frightening, bringing up memories of missed mortgage payments or maxed-out credit cards. When dealing with a collection agency, it can be a very nerve racking experience. But it is interesting at how few people are really aware of what collection agencies are and what their limitations are. As such, let us examine just what collection agencies are, what types of agencies there are, and what laws they have to abide by. Hopefully, a bit of clarity can help ease the tension when having to deal with one.

A collection agency is a business that specializes in contacting and obtaining debts owed from either individuals or businesses. They are used for varieties of debts owed: whether it be mortgage payments or even extremely late library books. Just as there is a variety of debts, so too is there a variety of collection agency types. The most simple of the types are first and third-party collection agencies. A first-party agency tends to be a branch of the company who is owed a debt. An example would be a bank contacting a debtor when they fail to make a mortgage payment. On the other hand, a third-party agency is an outside company, hired to contact debtors on behalf of their clients. If the bank hired \”Average Joe\’s Collections\” to contact the debtors, it would be an example of a third-party collection agency.

There are advantages and disadvantages to either model of agency. A first-party agency is technically part of the company that is owed a debt. As such, they have to try and maintain a more affable approach to dealing with a debtor in order to maintain the client. Third-party agencies are different. They are hired for one reason: to get the debtor to pay what they owe. As such, they couldn\’t care less about the relationship between the debtor and the debtee.

However, third-party agencies must follow certain laws. The Fair Debt Collection Practices Act (FDCPA) is a set of restrictions that forbid third-party agencies from harassing debtors. Such restrictions placed are the prevention of agencies from calling debtors at unreasonable hours, publishing the consumers name or address on a \”bad debt\” list or report or threaten to report false information on a debtor\’s credit report. While these restrictions only apply to third-party collection agencies, most first-party agencies follow these restrictions as well, in order to maintain a positive relationship with debtor.

While they have garnered a reputation of being bogeymen, collection agencies are a very necessary part of maintaining a business. These are the people that make sure debts are paid and as such have to maintain contact with a fair amount of customers. But it is also good to know that in spite of that job, there are restrictions placed that stop them from harassing debtors.

Rapid Recovery Solutions is a full service debt collection company that can help you collect your funds. Call RRS today for additional details!. This article, Understanding The Deal With Your Collection Agency has free reprint rights.

Understanding The Deal With Your Collection Agency