Collection agency FAQ

Written by: Jean Marquit

A collection agency collects debts on behalf of creditors who have not been paid for products or services. There are some collection agency issues that businesses typically care about. Before you decide to hire a company to retrieve your debt, it’s a good idea to review these collection agency FAQ to know the common rules and understand how the collection process works.

By reading this collection agency FAQ, you’ll get a better understanding of agency procedures for collecting unpaid debt.

Q: How does a collection company make money?

A: Collection agencies make money either on commission or when they buy debt outright. Agencies that work on commission get to keep a percentage of the money that they collect and then forward the rest of it to the creditor. If the agency buys the debt outright, usually for less than what is actually owed, the agency keeps the entire amount collected.

Q: What are some of the collection agency rules?

A: Collection agencies are supposed to abide by certain regulations that protect consumer rights. This is one of the most common collection agency FAQ because people wonder what sort of practices are allowed. Collection agencies can only call between 8 a.m. and 9 p.m. Agents must identify themselves and explain why they are calling. When they call, agents can’t lie nor can they imply that they will put out a warrant for the debtors arrest if they fail to pay. Further, if a debtor asks a collector to stop contacting him or her, the collection agency must stop.

In addition, collection agencies can’t seize a debtor's assets. The agency also can’t sue the debtor in court unless they assume full ownership of the debt.

Q: What is collection agency procedure to collect unpaid debt?

A: The collection agency usually writes a letter and then follows up with phone calls. Usually, the agency looks for current contact information and then attempts to inform the debtor of how much is owed and how he can discharge the debt. Often, a collection agency makes periodic calls until the debt is paid. Once the debtor pays, the creditor can then get paid.

Collection agencies can also report nonpayment to credit bureaus making it more difficult for the debtor to obtain credit later.

To get answers to your collection agency FAQ, use BuyerZone’s free request for price quotes form to get matched to multiple collection professionals who can address your needs. For more detailed information about how collection agencies work, read our comprehensive Buyer’s Guide.