A collection agency is a business that produces an attempt to collect past due debt from either a business or an individual. They are several different types of collection agencies that can be operating currently such as the first-party collection agency, the third-party collection agency, and debt buyers. If you’re on the debtor side of the debt collection industry, many see them to be aggressive and lacking compassion for a person when they’ve fallen on hard times. If you’re an assortment agency representative, you become skeptical that the debtor is telling the reality in regards to why they are not paying the debt because they have probably heard every story known to mankind.
A first-party collection agency is usually only a department of the first company that issued the debt to start with. A first-party agency is usually less aggressive than a third party or debt buying collection agency as they’ve spent time gaining the client and want to make use of every possible solution to retain the client for future income. A first-party agency typically will collect on the debt just after it’s initially fallen past due. Sometimes, they will first send past due notices by mail then after having a month begins making phone call attempts. With respect to the time of debt, they might collect on the debt for months before deciding to show the debt over to a third-party collection company.
A third-party collection agency is an assortment company that has agreed to collect on the debt but was not area of the original contract between customer and service provider hire a collection agency. The initial creditor will assign accounts to the third-party company to collect on and inturn pay them on a contingency-fee-basis. A contingency-fee basis means the collection business will simply receive money a particular percentage of the total amount they collect on the debt. Since the 3rd party agency doesn’t get the total payment amount and isn’t concerned with customer retention just as much, they are typically more aggressive using better skip tracing tools and calling more often than the usual first-party collection agency. It is standard for third-party collection agencies to start using a predictive dialing system to put calls quickly to accounts over a quick amount of time to increase attempts to both debtor’s home and host to business. Never as common is the flat-rate fee service which consists of a collection agency getting paid a quantity per account and they will have each account placed using them on a particular schedule for collection calls and letters. In caused by the aggressive nature that 3rd party debt collection companies use, the FDCPA was created to help control abuse in the debt collection industry.
Lastly is the debt buyer who purchases debt portfolios which consist of numerous accounts typically being from exactly the same company. A debt buyer will own all the debt purchased and will receive all the money paid to them. Since they’ve more control within the negotiations and since they paid a dollar on the dollars, debt buyers are far more willing to offer large discounts or settlements in paying the debt off for the debtors.
As you can see, they are many different types of debt collection firms that collect from both companies and individuals. The answers are exactly the same but the sole difference is simply how much of the amount of money is collected goes to the collection company and the amount of money can become to the first creditors. Though highly scrutinized by politicians and media, collection agencies have been around for several years and will continue to be an asset to the overall economy if utilized in a responsible and professional manner.