Debt collection agencies – what are they?

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( — September 17, 2021) —

Some debt collectors operate independently, while debt collection agencies employ others. They may also be attorneys. A debt collection agency may act as a middleman, collecting customers’ past due debts that have atleast sixty days due and collect them for the original creditors.

How Debt Collectors Work

Most debt collectors specialize in a particular type of debt. It may be possible for an agency to collect debts no older than two years and at least $200 in delinquency. The reputable agencies will also only collect debts within the limitations period, which differs by state. In this case, the debt is not beyond the statute of limitations, so it can still be pursued by legal means.

A percentage of Commercial debt collection is paid to collection agencies, usually 25-50%. Collecting debts comes in many forms: credit cards, medical, auto and student loans, loans for your home, business and auto, and utilities and cell phone bills.

If a debt can’t be recovered, collectors may seek to settle the debt with consumers for a lower amount than was owed. In addition, collection agencies may refer cases to lawyers who will file suits against customers who refuse to pay.  

What a debt collector does

Delinquent borrowers are contacted by mail and contacted by phone by debt collectors to encourage them to repay their debt. In the event that debt collection agencies are unable to reach the debtor using the contact details, they use private investigators and computer software.

In addition, they can check the assets of a debtor, thereby determining their creditworthiness. Delinquent debts may be reported to credit bureaus if the consumer is not paying, as this can result in severe credit damage.  

Debt collectors depend on the debtor paying and cannot seize wages or access bank accounts, even if they know the routing number and your bank account unless a judge gives an order. A judgement means that creditors have to pay a certain amount to the debt collectors. First, the agency files the lawsuit against the debtor during the statute of limitation and wins the case for this judgment. If they win the case, they can contact the debtor’s employer or bank to give their money. 


Those already facing judgments are also contacted by debt collectors. Even if the judge gives a ruling favouring the collector, collecting money is still a challenge. Debt collecting agencies can use different methods to collect their money by forcing an asset sale, property liens or levies on the debtor account.