Working With a Debt Collection Agency

No matter how hard we try everyone is capable of falling behind on their bills. Individuals can fall behind easily after making big purchases they didn’t really have the money for in the first place. Businesses can fall behind on bills for a number of reasons, not the least of which would be a poor investment that does not provide returns. When creditors find that their clients are behind on bills it begins to hurt their bottom line as well because it negatively impacts their cash flow. What options do creditors have when they have clients that are far behind on their bills?

The best option for many creditors is to begin working with a debt collection agency to try and resolve past-due bills. Debt collection agencies often operate as third-party entities that take debt cases from creditors on a case by case basis. The biggest benefit involved in hiring a debt collection agency is passing on the stress and pressure of resolving debt situations to another party.

Debt collection agencies in the United States must follow a strict set of laws and guidelines that govern the way they conduct business. The Fair Debt Collection Practices Act was enacted by the U.S. Congress in 1978 to protect consumers from abusive, harassing, and unfair debt collection practices. Additionally, each state in the U.S. has developed its own laws on top of the Fair Debt Collection Practices Act to govern debt collection agencies operating in their state.

Before working with a debt collection agency creditors should understand what this process will entail for both their company and their debtors. When creditors hand a case over to a debt collection agency the following process will begin:

  • The debt collection agency will examine the data and supporting documentation on the debt
  • Agency will make contact with debtor at first through a demand letter and later through phone or face to face contact
  • Collectors will attempt to arrange a debt resolution and payment plan for the creditor
  • If agreed upon, collection agency will oversee repayment of debt to creditor
  • If debtor remains negligent, debt collection agencies can recommend the creditor move the case toward litigation

It is important for any creditor to wisely choose the debt collection agency they work with because these individuals are going to be representative of the creditor’s company in the eyes of the debtor. The debtor will be faced with demand letters, phone calls at home, and even potential phone calls to their friends, family members, and co-workers. Although the scope of any phone call is limited in its purpose, it is nonetheless going to be embarrassing for the debtor and is likely to upset or enrage them.

When choosing a debt collection agency to work with a creditor should take all the necessary steps to ensure they are working with a reputable group. One sure fire way to find a reputable debt collection agency to work with is by finding one that is affiliated with the American Collector’s Association. The ACA does not allow any agency membership in their program unless they abide by the strict rules and guidelines that govern the debt collection process.

Finding a good debt collection agency to work with can mean less headaches for the creditor’s company, as well as fewer man hours wasted pursuing past due accounts. A debt collection agency will work hard to resolve issues between debtors and creditors, taking the burden off the shoulders of creditors.