Debt collection agencies: a guide for consumers

When lenders give out debts, they will still pursue the creditors to ensure these amounts are fully settled within the legally allowed time. In most cases, debt is a burden to borrowers and repayment get difficult. Creditors have ways of making sure that the payments are completed, and one of these ways is by using debt collection agencies. What these agencies does is simple, they pursue debtors on behalf of creditors and regain the debts after which they get some commission out of it. Better still, some agencies purchase the debts at a lower price and pursue them on their own keeping all the money that come after the debtors have paid.

Types of debt collection agencies

Debt collection agencies come in different forms and ways of operating. One of the most common of them is the first-party debt collection agencies. These ones are part of the original lending agent, and work under the management of the lender. They are more cautious when handling customers, because of building better rapport with them for purposes of long-term benefits. Most of these agencies have no legal legislations like the other third party agencies. First party agencies strive to regain the debts for sometime before passing them over to third party agencies.

In comparison with first party agencies, third-party debt collection agencies have a more no nonsense mindset. They are not part of the creditors; hence care less about keeping good relationships with debtors. In most cases, creditors pay these agencies some percentage of the intended debt prior to commencement of debt pursuit. If the creditor decides to cancel the contract between them and these agencies, the lenders will still have to pay the percentage of the total debt as earlier agreed. However, this is not always the case as some lenders operate under a ‘no collection no payment’ policy.

How debt collection agencies operate

Commonly, debt collection agencies have legal rights of directly contacting the debtors to inform them about their debts and time remaining for payment. This can be via phone calls, which in most cases have legal limitations to avoid unnecessary harassment for the consumer. In the US, these calls are prohibited if they will incur billing on the side of the debtor, but in other countries, the phone call receiver is never charged hence this law might not be applicable there. The law also allows the time within which these phone calls can made, usually between 8am-9pm. Most phone calls whether they involved debtors or not are subjected to statistical recording by the relevant call centers. If such a call is outside the allowable time, then it is deemed illegal and legal action can be taken.

Debt collection agencies also have rights to contact other parties who can facilitate repayment process or tracking debtors. This can include calling known neighbors who can give directional information about the debtors’ current location, without discussing the debt. Even so, impersonation of any kind is illegal. This includes illegal deceptive ways of convincing debtors to pay the debts. Obscene language is also not tolerating by law during and after debt pursuits.

Handling debt collection agencies as a debtor

A debt is only payable if it is within the limited time of payment, and not because a lender says it is. This time limit is legally known as Statute of Limitation. This is more of an expiry date and start from the time the debt is awarded to the time it should be legally acquired. Beyond such period, debt collection agencies have not right what so ever to reclaim these debts. The debtor who knows this will file a lawsuit is such an agent shows at their doorstep or contacts them. One thing to understand from the side of debtors is that, any slight repayment for an expired debt might make the debt payable again by law.

There are many minor laws that do not make much sense during debt acquisition, but later do during the repayment process. It is important for debtor to understand these laws. They might differ when it comes to current geographical location, but most of them tend to protect the debtors against unnecessary stress from lending agents.