Debt Consolidation Credit Counseling In Austin Debt Consolidation Credit Counseling In Austin

Find out more on Debt Consolidation Credit Counseling In Austin Now!

Saturday, November 29, 2008

What is a Collection Angeny and how do I know if I need one?

By JR Rooney

Debt collection agencies are hired on behalf of creditors to collect money when the creditors don't have the time or resources to effect collections on overdue debts for themselves. Collection agencies specialize in getting people to pay, they have staff that specializes in debt collection and skip-tracing, which covers a broad range of FDCPA legal and debt negotiating skills, and a streamlined process for going after accounts.

As a company that is owed money you can hire a collection agency. They get assigned the task of collecting the account. Most agencies, when successful will take a small portion of the collected amount. Be careful of firms that want money upfront.

Most collection agencies do not buy the debt outright. The debtor does not actually owe the agency the money. It still owes the debt to the original creditor. The collection agency will provide, if asked, proof (known as validation of debt) that they have been placed into collections on behalf of a creditor.

Occasionally, collection agencies will purchase the debt from the creditor. However, usually all that the collection agencies acquire is the right to carry out the process of debt collection.

All collection agencies are governed by federal laws and no collection agency is, or wishes to be in, the business of collecting fraudulent debts. However, when acting on behalf of a legitimate creditor they will take all legal steps to enforce the collection of badly overdue accounts, if necessary going to court on behalf of the creditor.

You need a debt collection company when -

the debtor gives you broken promises The debtor refuses to pay voluntarily they have not filed bankruptcy

A debt collection agency will approach the issue through a multi-stage writing campaign which can be effective, if occasionally slow, but it may not lead to recovery when -

the debtor has or thinks he/she has a valid defense the amount owed is disputed in full there is faulty product the debtor's solvency is in doubt or there is the possibility of bankruptcy

If any of these circumstances occur, the creditor should for their own legal protection retain control of critical decisions such as if and when to litigate, what attorney to retain and any other decisions made prior to or during litigation. This is particularly important where the creditor has a long term interest in retaining the customer as his client. Not retaining control of critical decisions and proceeding without the advice of an attorney could leave the creditor open to adverse legal liability.

The option exists where the creditor does not wish to do additional business and the creditor is not interested in the outcome of a debt collection, beyond getting his money, to sell the debt to a debt purchaser.

About the Author:

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

<< Home