Debt collection agencies basically help businesses and individuals recover their debts. Some debt collectors operate independently while some are lawyers.
The debt collection agencies often collect debts from customers and remit the same to creditors. The creditor then pays the debt collector a certain percentage.
It is also important to note that debt collection agencies tend to specialize in the type of debts they collect. For instance, there are agencies that might decide to collect debts ranging from $200 and are less than two years.
Debt collection agencies also negotiate settlements for customers who are unable to fully repay their debts.
Below are 7 things that debt collection agencies do:
1. Collect Due Debts
This is what most debt collection agencies do. Some companies and individuals outsource their debt collection services in order to have more time for other important activities of the business. It is, therefore, the work of a debt collection agency to ensure that all invoices are paid as per the agreed date of every invoice. They can call, text, email or physically come to collect debts from your home or office.
2. Demand Payment For Expired Debts
This is another major function of debt collection agencies. All unsecured debts such as medical bills and credit cards have statute limitations and after the expiry of that date, it is not possible to sue the debtor. However, it doesn’t mean that you can’t pay it. Debt collection agencies can still come and demand the payment from you.
3. Pressure You To Pay Debts
Although debt collectors cannot threaten you, they have a legal right to pressure you into paying your debts. The pressure may include calling you daily, texting and sending emails. Their main aim is to ensure that you pay the debt by all means necessary.
Different debt collection agencies use different strategies to pile pressure on people to pay debts. The only way to avoid such kind of pressure is to pay the debt you are being owed.
4. Assign Deadlines For Paying Debts
A debt collection agency can also give you ultimatums for paying your debt. They can do this through a call, email or official letter. This is often after pursuing a debtor for a long time without success. Some debt collectors will ask when you will be comfortable to clear the amount owed to you before issuing ultimatums.
5. Sue Debtors For Payment
So, can a collection company sue you? Debt collection agencies also have the responsibility of suing people who completely refuse to pay debts as a last resort. The lawsuits are often geared towards ensuring that the debtor fully repays the debt owed to them.
In addition to that, a debtor will also be required to pay the costs for the court case as well as the late payment fee. However, this will depend on how the debt collection agency will argue their case.
6. Sell Debts
A debt collection agency can resell your debt to another debt collector. It doesn’t matter if you have paid some amount or not paid anything at all. That’s why you should not be surprised if a different debt collection agency starts contacting you.
Ensure that you obtain an agreement in writing after you make full payment. This will help you to prove your case in court in case another agency tries to claim otherwise.
7. Negotiate What You Owe
Since debt collection agencies purchase debts for pennies on each dollar, they have to make a lot of profit if they are able to recover the original amount owed. This, therefore, makes it flexible for them to negotiate payment with the customer.
For example, they can propose a settlement of 40% or 35% of the original amount owed to the customer. However, ensure that you get a written agreement showing that you have fully settled the debt.
Without such an agreement another debt collection agency or even the owner might come back later to claim the remaining amount that you were not able to clear.
Bottom Line For Debt Collection Agencies
Debt collection agencies exist to assist businesses to collect debts. This is because the whole process of demanding payment is not only tedious but also time-consuming. Companies such as Bluechip collections Brisbane have for many years helped businesses recover debts that seemed impossible.
Eric Reyes is a passionate thought leader having been featured in 50 distinguished online and offline platforms. His passion and knowledge in Finance and Business made him a sought after contributor providing valuable insights to his readers. You can find him reading a book and discussing current events in his spare time.
