Debt collection is the procedure of following payments of delinquent debts owed by consumers or other companies to third parties. The method is used to attempt to recover past due monies from the consumer. An agency that specializes in debt collection is also called a collections agency or collection company. There are also private for-profit entities that collect unpaid debts, but they operate more as a for-hire business and therefore do not fall under the restrictions imposed by FTC. Have a look at more info here to get more info on this.
If a debt collector fails to get an agreement from the original creditor or the third party involved then there are several methods in which the consumer may follow to resolve the issue. Most often, the debtor will notify the debt collector in writing that they are not paying the debt in full. In some cases, the debt collector will send a money order to the original creditor or the third party. In these cases, the money order is cashed at the recipient’s financial institution. This money is then held until the full amount of the debt is repaid or the debt collector receives another written notice from the original creditor or the third party stating that payment has been made.
On the other hand, if the debt cannot be paid in full within twenty-one days after it is due, the original creditor or the third party will file a complaint with the Credit Bureau. Once a complaint has been filed, the agency will investigate the matter and determine whether or not collections were made in compliance with the Fair Debt Collection Practices Act. If the agency determines that the collections were made in disregard of FDCPA guidelines, they will notify the debtor. If the case was found in violation of the law, the offending collection will be halted while the agencies try to work out an agreement.