The role of collection agency can be very beneficial when the debtor ignores the creditor’s call or letters to clear his/her past due or outstanding accounts.
The whole process of transferring the debt to a collection agency should be as seamless as possible to start. For instance, debts related to credit card, medical debts, telephone service etc. usually are either uploaded into the debt collection agency’s website or sent via spreadsheet.
One the debt is received by the collection agency, the first step is to send a letter. The initial letter in most cases in generated within the first 72 hours. Once letters are received phone calls can be made. The FDCPA limits the amount of calls a debtor can receive and at what times. Usually once letters and phone calls are initiated calls will begin to come in to the client’s office to settle the debt. There are a couple things to remember once a debt is sent a collection agency. First, do not make attempts to collect a debt once the process is initiated by the collection agency. Two, you can settle and collection payments if the debtor contacts you, but you must notify the collection agency, so they can stop the collection process. Once payment is received by a collection agency, payments are usually sent to clients on a monthly basis.
The rates for most collection agencies can differ drastically and are based on a number of factors, age, type of debt, area..etc. Most consumer debt is charged between 30-40%. Commercial is 25-30%.
Sometimes it may be in the best interest of a business owner to sell the debt to a collection agency or “debt buyer”. This allows the creditor to sell out and collect money immediately. The amount is generally not much, but it guarantees the creditor something for their debt.
Sometimes on larger balance debt, the process needs to be taken further to collect the debt. This may include litigation. Remember, a debt collection needs permission to sue from the creditor, as the account needs to be “assigned” to them legally. Make sure this is discussed before placing a debt with a collection agency. Many collection agencies do not have the resources or expertise to litigate.
Remember it is in the collection agency’s best interest to collect your debt. Since many are contingency based, they only get paid if they get money for you. Sometimes they will be very persistent with the debt to get paid. Sometimes it may cross the line. Be sure to speak with a collection agency about their practices before you place accounts. It could be a huge headache for you, if you choose an agency that does not respect the laws and your debtors. It is important to remember that you should not choose a debt collection agency on their fee alone. A collection agency may charge you a great rate, but you can be assured that they will not allocate as many resources to collect the debt, as they won’t have enough of a fee to warrant it. The most important thing is their collection rate. Remember at the end of the day the most important thing is the size of the check you get each month, and that they adhere to all the laws.
Revenue Recovery Solutions is a nationally respected debt collection agency, located in Pittsburgh, PA. It has various units which work collectively to collect debt across the United States. Their collection agents are highly trained professionals and experienced in collecting debt across multiple verticals.
