What Are Collection Agencies?
Many business organizations acquire the services of collection agencies in order to collect the debts that they owe. They believe that the time and efforts required to collect the payments distracts the employees from their core responsibilities and they are unable to perform their job properly. Therefore they utilize the services offered by collection agencies and pay them in return. Usually collection agencies charge 20 to 35 percent of the debt that they manage to collect successfully.
Thus, paying a percentage of the debt to the collection agency is considered to be a better option than collecting no debt at all. Moreover, debt collectors that work in these collection agencies are known for their aggressive attitude towards the debtors; however, this is not true in all cases because the debtors are entitled to a fair treatment as prescribed in the Fair Debt Collection Practices Act (FDCPA).
Functioning of the Collection Agencies
Initially the collection agencies start working by delivering a letter or making a phone call to the debtor. However, a very small percentage of the debtors react to the first notice. They get an opportunity to talk and explain why they were not able to fulfill their commitments. In some cases the debt is no longer legitimate as the debtor has already filed bankruptcy. The debt collector is required by law to give complete information to the debtor regarding their identity, who they are working for and the rights they have.
If the debtor does not give any positive response within a few days usually 30 days, the debt collector sends another notice. After this, some of the debtors do respond by paying off their debts while others try to avoid any sort of communication with the debt collectors.
If the debt collector is successful in collecting the debt the collection agency is paid a pre-decided percentage of the debt. However, when there is no hope that the debtor will pay back the money, the next step to be taken by the debt collector is either to put the debt on the debtor’s credit report or to sue the debtor.
Thus, you can find the best collection agencies with the help of brokers who can be easily found by searching on the Internet.
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