What to Consider while Working with a Debt Collection Agency?
Since you delayed your credit card payment a few months ago, you probably. Many annoying phone calls have been received from borrowers.
However, you need to learn some facts about the debt collection agency. Although many companies are working under the authority, not all collection agencies operate legally or under license to provide their debt collection services.
What is a debt collection agency?
A debt collection agency is a company that receives debts from customers or business entities. Most collection agencies run their businesses as creditors’ agents. They help creditors collect the debt allocated for a percentage of the total loan amount collected as their fees.
Some agencies are also known as “loan buyers”. They take loans from creditors for pennies on dollar dollars and hunt for the full amount of debt owed.
Typically, after several months of pursuit without the success of the debtors, creditors will allocate or sell debt to collection agencies so that the amount of this bad debt can be written off due to a loss in their records.
Things about debt collection services that you need to know
Those who are chased by debt recovery agencies know that they are aggressive and have a bad reputation for intimidating and harassing debtors. Fortunately, in many states, collection agencies are monitored by law to prevent some unpleasant practices. As it is aggressive in nature, there are some activities that borrowers should be aware of when working with debt collection agencies.
- Avoid talking to debt recovery agencies: The less you talk to them the better. If they call you at your home, at work, or on a cell phone, simply ask them to communicate with you by mail, and send them a ceasefire with the mail registered with the receipt.
- Even after you send them a mail and they keep calling you, you should tap the phone conversation. Check your state’s law to see if your conversation is allowed to be recorded. Usually when you tell a debt collector that a conversation will be recorded, it is likely that the phone will hang up.
- Be familiar with the law of limitations in your state. The debt collector will keep calling you for a long time, the debt is also over and the loan no longer needs to be repaid legally.
- If you make any kind of payment to the debt collector, you simply confirm the loan and resume the law of limitations. Therefore, it is very important that you are aware of your rights.
- Aside from the law of limitations, you should also learn your rights by reading the Fair Debt Collection Practice Act (FDCPA).
- Under FDCPA, you have the right to approve a loan. Ask the collector to prove that you are the person responsible for the debt. If they fail to prove it, you have no right to take a loan from you.
- Just because you are in debt does not mean you should be threatened. Be aware of the debt collection agency and be educated about your right to deal with them.
Final thoughts
Debt collection agency is a necessity in our current business environment. While companies have always needed a collection agency with increasing amounts of commercial loans, debt collection agencies are even more needed. Collection agencies are called by companies that are not able to receive payment from the business for their invoices. Business loans can grow rapidly with interest charges and sometimes troubled companies will simply stop paying and suddenly find themselves unable to pay in full. When this happens, debt recovery agencies can move on.
