Debt collection is simply the process of chasing payments of outstanding debts by people or companies. Collection agencies are also called debt collectors or collection companies. Collection agencies are governed by laws and can be sued for civil wrongdoing.
Debt collection agencies are paid for the collected debt by the creditors, and they are compensated through interest and fees. A collection agency can pursue customers even when they are not sure of their legal rights, see website to know more.
Credit Card Holders: In case your account has gone delinquent, or you have not received payment on credit card bills, then debt collectors may start calling you. The first step they take is to inform the credit bureau that you have not paid your bills. They also warn your creditors about the debt collectors. The creditor will request for details from the debt collectors, like the name, address, birth date, social security number, and other pertinent information. When you provide such details, the credit bureau sends a letter to your creditor notifying them that you have not paid your bills.
Debts with No Clear Title: Many debts have no clear title. When a debt collector calls for the debts to be transferred to your name, you should not cooperate. If you are in this kind of situation, you should first check with the credit bureau to find whether the debts belong to you. If yes, then you can ask the debt collectors to stop making such calls and transfer the debt to your name. However, it is important to note that you remain the legal owner of all debts too.
Debt Collectors Using Ransom Collecting: Some debt collectors, particularly those who operate outside the state, use what is called ransom collecting technique. Basically, they threaten the debtors that if they do not pay the money, they will make the victim endangered species, i.e., they will put the debtor in jail or cause physical harm. Often, these threats are carried out via the phone.
Fraudulent Collection Agencies: Some debt collectors, especially those who operate outside the state, use questionable tactics to collect delinquent debts. For instance, they may threaten the creditor or offer to settle the delinquent debts for a fraction of the actual amount owed. Such collection strategies are usually illegal as well.