When you receive a phone call and the person on the other end of the line says, “Hello, my name is John Smith and I am calling on behalf of the XYZ Collection agency,” what exactly does that mean?
The answer to the question “What is a debt collection agency” baffles many consumers, but the answer is not that difficult to understand.
If you fall behind on a consumer debt for more than 60 days, a third party debt collector might begin the process of getting you to take care of the outstanding debt. Some of the sources of delinquent debts include mortgages, credit cards, medical bills, and personal loans.
How Do Bill Collectors Operate?
There is not a one size fits all answer to the question “How do bill collectors operate.” You might deal with a debt collection agency that acts as the representative for an original creditor. The agency receives a commission from the original creditor for getting you to pay off the delinquent debt.
A third party debt collector might purchase a debt from the original creditor at a fraction of what you owe. However, the third party debt collector will still want the entire amount of the original debt. Creditors sell debts to collection agencies based on the age of the debts.
Debt collection agencies pay less for bundled consumer debts that are several years old than what they pay for bundled debts that are less than one year old.
What You Should Expect from a Debt Collection Agency
A debt collection agency might contact you by phone or snail mail to start the debt collection process. Regardless of the method used for the initial contact, the agency will send you a letter about five days later explaining in detail everything you need to know about the consumer debt in question.
You should learn how much you owe, as well as the name of the original creditor. Subsequent forms of communication can include emails and text messages, depending on the contact information you submitted on the credit application.
A debt collection agency is not allowed to call you between the hours of 9 pm and 8 am. The time restriction is just one provision of a sweeping federal consumer protection law passed in 1977.
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How the Fair Debt Collection Practices Act Protects Consumers
Before 1977, debt collection agencies treated consumer debts like gunslingers treated the lawless Wild West. Third party debt collectors bullied consumers into paying off delinquent credit card and personal loan accounts, some of which consumers were not legally obligated to settle.
After listening to consumer complaints, the United States Congress enacted the landmark Fair Debt Collection Practices Act (FDCPA). The FDCPA prohibits the following types of debt collection agency behavior:
- Harassment
- Issuing threats
- Using obscene language
- Implementing deceptive collection techniques
- Providing false credit information to credit reporting agencies
- Publicizing your debt delinquency
Consumers have the right to fight back against the illegal actions performed by third party debt collectors. However, fighting the good fight alone is not a good idea.
You should work with a licensed consumer protection lawyer that has amassed years of experience helping consumers win civil cases against debt collection agencies that have violated one or more provisions of the FDCPA. Under the FDCPA, you have the right to seek monetary damages for violations.
Speak with a highly rated FDCPA attorney to learn more about how the consumer protection law protects you against the unethical practices implemented by debt collection agencies.
Additional Resources