Have you ever wondered How a Debt Collection Agency Works?
Maybe you have never been contacted by a debt collection agency. This would worry anyone who is contacted. It wasn’t on purpose but you ended up getting behind on your bills and now you are nervous about the process and what to do.
This blog post will give you some insight into what happens with a debt collector. You will also understand more from the perspective of the agency and what motivates them to work with you. Take a deep breath and make a plan that works for the both of you.
The Business of Debt Collection
Typically, debt collectors work as a typical debt collector and work for a collection agency, however some use a lawyer for their collections. Some agencies are the middleman between you and the creditor. It is their job to collect from you what is owed them while the collection agency keeps a portion of what they retrieve. Average percentage they keep is anywhere between 25% to 45%. The agency may work with any company who needs to collect unpaid debt. It could be loans of any type, car, house, student loans, credit card or utilities. Majority of collection agencies have a specialty in the type of debt and industries they work with. They will negotiate with you to find a plan that works for paying back your debt.
It is a difficult to collect debt or out of their expertise they may in fact turn it over to a lawyer to collect.
Some Collection Agencies Buy Debt
How this takes place is when the creditor feels like it is most likely they will never be able to collect, it will cut the losses by selling that debt to a debt buyer. Debt buyers purchase these on average .4 on the dollar. Each debt is not created equal. Example a mortgage debt is worth more than a cell phone debt. This is not the typical way collections take place today.
Here is what Debt Collectors Do
They use letters and phone calls to contact delinquent clients and try to work out a way for them to repay what they owe. They will find you no matter where you move with a software called Skip Tracing. You owe it you will have to pay it. Collection Agencies may repost delinquent accounts to credit bureaus. You do not want to damage your credit score any further.
Agencies also can work with debtors that have court orders to repay a specific amount. Even when a creditor wins a judgment they can find it difficult to collect. This is when many will hire a Debt Collection Agency.
Reputable Collection Agencies
Debt collectors have a been given a bad rap for harsh tactics and harassing debtors. Many are turning into the Federal Trade Commission. If you are hiring a collection agency do your home-work and find one that doesn’t violate the protection laws and actually works hard to salvage those relationships for future business. A good collection agency is honest and will work with clients on a commission basis. These collection agencies care about their reputation and they only collect a fee if they collect.
Reputable debt collectors will try to obtain accurate and complete records so they don’t pursue people who don’t really owe money. If you tell them the debt was
Affects your Bottom Line
Debt collection is a legitimate business. Keep in mind if a debt collector contacts you, you may have just been contacted by the best person to help you resolve your debt situation while keeping a kind working relationship. Many debt collectors are honest and kind people who are just doing their jobs. They want to work with you to create a plan to help you repay your debt. It may be in full, or monthly payments. Work with the collection agency it is in your best interest!
MCA is a third party debt collection agency that has been in constant business since 1950. We are rated A+ with the Better Business Bureau and we pride ourselves in excellent customer service along with delivering great recovery rates. There is no cost to you unless we collect! Why not try and re coop some of your past due accounts with no out of pocket expense?