Debt collection is the procedure of chasing payments of outstanding debts by people or businesses. An agency that specialize in debt collection is called a collection firm or debt collecting agency. Most international debt collection agency work as representatives of lenders and collect debts on their behalf for a specific fee or percentage of the outstanding debt.
How does the debt collection agency work?
Debt collection agencies can be approached either through telephone, mail or personally. A debt collector can also be an individual who regularly contacts people for payment of debts. These debts owed could be medical bills, credit card bills, utility bills, store cards, store balances, an unpaid loan or overdraft fees, and more. A debt collection agency can contact you by mail or phone to sell any product that it has on offer, or if you have agreed to buy something, they can visit your place of business. They can also call your place of residence and threaten you with public exposure of your debts if you do not pay.
All debt collection efforts are governed by federal laws and can be initiated by creditors, suppliers and credit bureaus. A creditor is any person or organisation who lends money for repayment of an obligation to another. It does not include bank overdrafts, secured loans, lottery winnings, gifts and inheritances. The rights of the creditor remain unaffected even if a debtor fails to pay the entire owed amount.
FDCPA regulates the works of debt collection agencies
The Fair Debt Collection Practices Act regulates how debt collection agency can collect monies from the original creditor. This includes the right to communicate to the original debtor to settle the debts. They can also communicate with a third party who can collect the monies from the third party. However, if a third party is employed to collect the amount, the original creditor cannot initiate any communication. Only if the original creditor makes, such contact are they within their rights to collect.
How is debt collection initiated?
Debt collection may be initiated by telephone, in writing or by personal visits. It is unlawful for a third party to make repeated phone calls to a debtor in most states. Collection may also be accomplished by stalking the debtor. Most states have anti-stalking statutes that include a penalty for individuals who harass others. Some states further define harassment as following or making repeated phone calls in furtherance of another’s malicious intent or a clear case of invasion of privacy.
Most transnational debt collection practices involve contacts with delinquent amounts. A creditor contacts a debtor with delinquent amounts and attempts to recover delinquent amounts from the international money transfer agent. If the creditor succeeds, usually the international money transfer agent will require payment upfront. Most states have anti-money laundering laws that prohibit lenders from requiring payment upfront.
In several cases, the debtor may attempt to deceive the lender. For instance, the debtor may threaten to report the company to the credit reporting bureaus if it does not pay. Most reputable credit reporting bureaus have policies that prohibit companies from making threats. However, the statute of limitations for reporting a debt is generally ten years in most instances.
Reasons to Hire a Debt Collection Agency
There are few reasons why you should hire a debt collection agency or company to collect your debts from the people or business.
Efficient debt collection processes
Debt collection is a complicated process. While some companies try to manage collections internally, it can be difficult as it’s time-consuming and takes away from tasks that generate income. A company specializing in collecting debt will have processes already in place. They’ll achieve better results with a higher efficiency level than you could on your own unless you have a dedicated employee to collections. If you hire an international debt collection company on a contingency basis, you have nothing to lose and everything to gain.
Compliance with regulations
Some laws govern debt collections that sometimes change. Not being familiar with the existing law does not save you from penalties associated with non-compliance. As a result, it’s always best to hand over the responsibility to expert debt collectors that will comply with laws, as this can prevent you from dealing with a lawsuit. When identifying an international debt collection agency, be sure to confirm its capabilities to mitigate any risks.
Trusted guidance and support
Unless you have worked in debt collections, you may not be aware of best practices for collecting a debt. A debt collection agency can offer you support and trusted guidance to avoid wasting time on practices that are not effective. Making a small mistake can end up costing you, which is less likely to happen if you hire a knowledgeable debt collector.
Because of the global nature of the internet, several debt collection companies can help consumers with any problem. The agency transfers funds to a location where they work with a consumer. If an agreement cannot be reached, the agency will then pursue the matter through international channels. As a consumer, you should be aware of your rights under the law so that you can protect yourself from abusive or coercive behaviour by a debt collection agency.