The term “collection agency” often summons negative reactions among people. This is because collection agencies have a reputation for abusive behavior. The Fair Debt Collection Practices Act (FDCPA) is a current, federal law that has been created to stop those abusive behaviors and protect the consumer while providing firm guidelines that collection agencies must adhere to. When companies violate these guidelines, victims can seek justice with the help of a debt collector phone harassment law firm well versed in debt collector phone harassment lawsuits.
So, what exactly is a collection agency? A collection agency collects debts owed. They are usually a third party that is hired to collect the debts after the original loan distributer has tried to collect but has failed, doesn’t have time, or would rather a debt collector mediate and do the work for them. Debts can be collected from individuals as well as businesses, and collection agencies take a percentage of the amount owed for their efforts once the individual or business starts payment.
There are a few different types of collection agencies. First-party agencies are usually involved first, as they can be part of the company or business that has the original debt. The second party is considered to be the consumer. These first-party agencies will try first to collect the debts before considering or giving the collection effort to a third-party collection agency. Third-party collection agencies are usually had nothing to do with the original loan or debt. These agencies are hired to contact the consumer to start paying their debts and that is their sole focus. The FDCPA helps monitor and uphold third-party agencies to the act’s standards, but first-party agencies are not upheld by the FDCPA standards.
Collection agencies may be extremely proactive to get debtors to pay. Guidelines provided by the FDCPA restrict the times, language used, and specific information that must be stated upon contact with the debtor. These rules help the collection agencies from becoming too proactive and abusive. Collection agencies and debt collectors are prohibited from impersonating anyone, including law enforcement, and cannot use obscene dialogue. These standards apply to third-party agencies and complaints can be filed if consumers experience any of these practices.
Collection agencies can collect different types of debt as well. Debts that are older, are delinquent, are less than a certain amount, etc. all have factors that come into play for collection agencies. Some agencies will receive a percentage of the amount paid by the consumer that had a delinquent debt. The more the consumer pays back, the more the agency will earn.
Collection agencies track and request payment from consumers that have debts owed. If they are third-party agencies as there are strict rules in which these agencies must operate, but first-party agencies do not have to follow the FDCPA. They contact consumers and try to work with them on paying their outstanding debts which can take a considerable amount of contact efforts and time.
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