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A collection agency is a business that makes an effort to collect past due debt from either a business or individual. They are several different type of collection agencies that are operating currently such as the first-party collection agency, the third party poseta plic ocazie collection agency and debt buyers. If you are on the debtor side of the debt collection industry, many find them to be aggressive and lacking compassion for a individual when they have fallen on hard times. If you are a collection agency representative, you become skeptical that the debtor is telling the truth in regards to why they are not paying the debt as they have probably heard every story known to mankind.

A first party collection agency is typically just a department of the original company that issued the debt to begin with. A first party agency is typically less aggressive than a third party or debt buying collection agency as they have spent time to gain the customer and want to use every possibly way to retain the customer for future income. A first party agency typical will collect on the debt right after it has initially fell past due. Often times, they will first send past due notices by mail then after a month will start making phone call attempts. Depending on the time of debt, they may collect on the debt for months before deciding to turn the debt over to a third party collection company.

A third party collection agency is a collection company that has agreed to collect on the debt but was not part of the original contract between customer and service provider. The original creditor will assign accounts to the third party company to collect on and in return pay them on a contingency-fee basis. A contingency-fee basis means the collection business will only get paid a certain percentage of the amount they collect on the debt. Since the third party agency does not get the full payment amount and is not concerned with customer retention as much, they are typically more aggressive using better skip tracing tools and calling more frequently than a first party collection agency. It is standard for third-party collection agencies to utilize a predictive dialing system to place calls quickly to accounts over a short amount of time to increase attempts to both the debtors home and place of business. Not as common is the flat-rate fee service which consist of a collection agency getting paid a certain amount per account and they will have each account placed with them on a certain schedule to receive collection calls and letters. In result of the aggressive nature that third party debt collection companies use, the FDCPA was created to help control abuse in the debt collection industry.

Lastly is the debt buyer who purchases debt portfolios which consist of many accounts typically being from the same company. A debt buyer will own all of the debt purchased and will receive all of the money paid to them. Since they have more control over the negotiations and since they paid penny on the dollars, debt buyers are more willing to offer large discounts or settlements in paying the debt off for the debtors.

As you can see, they are many different types of debt collection companies that collect from both companies and individuals. The results are the same but the only difference is how much of the money is collected goes to the collection company and how much money will end up to the original creditors. Though highly scrutinized by politicians and media, collection agencies have been around for many years and will continue to be a asset to the overall economy if used in a responsible and professional manner.

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