What does a professional collection agency do? Collection agencies are in business for one reason only — to make money. lheir only real function is to collect as much money that they can for their clients. There are various different ways they can do this, from sending dunning notices to filing lawsuits; it all depends on the individual situation. What is a professional collection service? A collection agency is a third-party collection service that collects past- due accounts referred to them by various credit-grantors such as credit card issuers, banks, car dealers, retail stores, healthcare facilities and any business that extends credit or offers payment installment plans.
A collection agency functions with usually 5 main departments or divisions:
I. SALES — This is the department that makes contact with the creditors and convinces them to assign their accounts to the collection agency for a fee or percentage of whatever is collected. This department is crucial to the success of a collection agency.
2. COLLECTIONS — VIhis is the department that works the accounts the sales staff brings in. They are highly trained professionals that are the backbone of the business. They are the ones who send the dunning notices and make the phone calls. They're also the ones you will be dealing with anytime you make contact with the collection agency regarding your debt. This department is crucial to the success ofa collection agency.
3.LEGAL DEPARTMENT - 'Ibis is the department that receives or will pull your file if legal action is necessary to collect the debt. They have nothing to do with the over-all collection of the debt and are advised by the collection department or the collector in charge of your account as how to proceed.
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GENERAL SUMMARY: Work on behalf of (collection agency name) and their clients to recover debt. Initiate contact with debtors and effectively communicate the of payment. Accurately researches account and establish leverage. Provide solutions to debtor and assist with structuring payment plans. When necessary recommend legal action. L IQB LUNCTIONS• Research and analyze accounts prior to initiating debtor contact, examine historical data and evaluate past collection efforts. Determine the most effective and economical means of collection for each account and apply standard due diligence to collect monies due. Initiate contact within 24 hours of new business being entered into system. Maintain complete records on all accounts including, but not limited to detailed documentation on all collection efforts. Utilize available resources and skip tracing techniques to locate debtors and any relevant credit information pertaining to the individual responsible for the debt. Advise debtor of proper payment schedules and the principles of credit and credit standings.
Maintain a consistent level of professionalism with the debtors at all times. Generate correspondence through the use of system letters. Follow company procedures at all times without exception. Maintain organized and current physical files for open accounts in queue. After 6 months of collection efforts, decide whether to litigate or close file. Other various duties at the discretion of direcT management.
KNOWlEOGE. SKills Knowledge of rules and regulations pertaining to collection methods and techniques. Extensive knowledge Of FDCPA and FCRA regulations. Ability to read, write and comprehend abbreviated correspondence, memos and invoices. Effectively communicate to debtors, staff and management. Ability to deal with problems involving a few concrete variables in standardized situations.
PERFORMANC[ STANDARDS; Achieve monthly goals Work all queues accounts in a timely manner. Queue aging should not fall behind more than days. Handle all incoming and outgoing corresHjndence within 48 hours of receipt. All duties are to be preformed in accordance with federal and state laws and presented in a professional manner. Education and Experience Six months to one year of previous experience. Formal training in the collections industry and FDCPA regulations. The statements herein are intended to describe the general nature and level of work preformed by employees assigned to this classification. They are not intended to be construed, as an extensive list of all responsibilities, duties and skills requires for classified.
(1) if they send a timely written dispute or request for verification, the debt collector must suspend collection efforts until it has provided the verification in writing;
(2) if they request in writing that the debt collector cease contacting them, the collector must comply.
Consumers should not have to pay to be contacted by a debt collector. Given the widespread prevalence of mobile calling plans that charge consumers based on the calls and text messages they receive,
Even if a collector is permitted to call a consumer’s cell phone, the collector must comply with Section 805(a)(1) of the FDCPA, which prohibits calls at times that the collector knows or should know are inconvenient to the consumer— before 8:00 a.m. or after 9:00 p.m., local time at the consumer’s location, unless the debt collector has knowledge to the contrary.
13 Ways to Deal with Debt Collectors & Agencies
The debt collection industry generates $11 billion a year from the 70 million Americans who haven’t or can’t pay their bills.
Debt collectors get most of their revenue from people who fall hopelessly behind on student loans, medical bills, auto loans, credit cards and home mortgages. Some forms of debt – student loans and medical debt especially – are shooting up so fast that many consumers aren’t even aware they are behind until they receive a call from a collection agency.
Collection agencies often are intimidating, demanding and most of all persistent, in trying to extract whatever money you have available to satisfy your debt. They can be just as aggressive in trying to collect debts you don’t owe, yet some people still pay, just to avoid any more contact with the debt collection agency.
And that is where the trouble begins.
Rule 1: Get Everything in Writing
Before you discuss anything with a debt collector over the phone request the information about the debt in writing. Debt collectors are notorious for giving out misleading information over the phone. This will guarantee a paper trail that documents the terms.
The Fair Debt Collection Practices Act requires debt collectors to send you a written notice within five days of when you were first contacted. The notice should detail the name of the creditor, the amount owed and inform you of your right to dispute the debt.
Once you receive the written notice, you have a 30-day window to dispute the debt in writing. A dispute letter does a couple things. Most importantly it stops the calls and second it buys some time for you to figure things out. Debt collectors cannot call or contact you until the debt is verified in writing.
Rule 2: Don’t Be Afraid to File a Complaint
In March of 2018, the Federal Trade Commission released a report on consumer complaints and consumers complained more about debt collectors than any other business.
For the third year in a row.
Debt collectors were responsible for 23% of the 2.68 million consumer complaints. That means the FTC received more than 600,000 complaints from people tired of the way they were treated by debt collection agencies.
If you have a complaint, go to this FTC website, click on Credit and Debt category, then click on Debt Collection Practices. A form will appear that requires you to fill in the necessary information.
It is best to be prepared with specific information on time, place, person’s name and company you were speaking with. If possible, have a witness with you during the phone conversation to testify to the validity of your complaint.
The FTC has another page on its website listing more than 100 companies and individuals it has banned because of illegal practices.
You also can file a complaint with the Consumer Financial Protection Bureau, the state attorney general in your area or the Better Business Bureau.
Rule 3: Debt Consolidation Plan
One avenue to explore before defaulting on payments – and inviting debt collection agencies to chase you down – is to consider using one of the methods available in a debt consolidation plan.
There are three types of debt consolidation plans: debt management programs; a debt consolidation loans; and a debt settlement plan. Each is designed to help consumers cope with overwhelming debt from credit cards, home, auto and student loans.
The first step for any of the plans is to contact a credit counseling agency, preferably a nonprofit company, which will go over your income and expenses and advise you whether any of the plans will work to eliminate your debt. Enrolling in one of these plans, especially a debt management program, could be a better solution that trying to deal with debt collectors.
Nowhere is the notion of “Knowledge is Power” more important than in the realm of debt collection. The less knowledgeable someone is about their consumer rights, the more likely debt collectors will take advantage of a delinquent borrower to repay an overdue obligation.
The situation grew so ugly that the federal government had to step in and pass laws to protect consumers. The Fair Debt Collection Practices Act (FDCPA) and Fair Credit Billing Act (FCBA) are part of the Consumer Credit Protection Act, which outlines what is accepted and prohibited behavior from debt collectors. This legislation also stipulates the rights and remedies afforded to consumers who are subject to debt collection efforts. In short, the laws protect consumers – and these are rights that collection agents prefer you not know.
The Consumer Financial Protection Bureau (CFPB) said it handled 84,500 debt collection complaints in 2017. Of those, 39% involved attempts to collect a debt that consumers say they don’t owe. Another 13% had to do with communication tactics and recurring phone calls at inconvenient times of the day. It’s unlikely collection agencies will share any of that during their phone calls to you, so here is a summary of 10 rules they would rather you didn’t know.
Rule 4: You Don’t Have to Talk
If you do not want to deal with debt collectors on the phone, there is an easy exit door available: Send them a cease-and-desist letter by certified mail that says you no longer want to be contacted by them.
If they continue calling you after that, they are in violation of the FDCPA, which puts them in trouble with the federal government. Keep a log of all calls and letters from them. Write down the time and date they called and the agency’s name. Keep any voicemails and letters of correspondence, including ones you sent to them.
If you do file a cease-and-desist letter, it doesn’t mean they won’t still try to collect the debt. It just means they can’t call you to discuss it. They could attempt to settle it through the courts so check the mail for a summons or court notice. If you have an attorney, refer all calls and mail to your lawyer.
Collection agencies can make a negative report to a consumer reporting agency, which would have a negative effect on your credit score.
The point is you are not required to work with them at all, including not talking to them.
Rule 5: It’s OK to Negotiate
If you want to settle matters with the debt collection agency, you or your attorney can negotiate a deal. First, figure out how much you can afford to pay and see if the collection agency will agree to that amount. The money could be a lump sum or monthly payments.
If possible, conduct negotiations at the end of the month. Collection agents often have deadlines and monthly goals they must meet. If they are desperate to reach one of those goals at the end of a month, they might be more willing to negotiate.
If the collection agency accepts your terms, get it in writing before making payments. There should be written proof on how much will be paid and by what date that amount must be paid.
Rule 6: There Is a Statute of Limitations
Creditors have a certain amount of time – 4-6 years in most states – to collect a debt before the statute of limitations runs out and they can no longer get a court judgment against you. You still owe the money and debt collectors may still attempt to get it from you, but they will have lost the help of a court judgment in attempting to collect.
If you make a payment or agree to a repayment plan, you could restart the clock on the statute of limitations.
If you are not sure whether the statute of limitations applies in your case – the rules vary from state-to-state – simply ask the collection agency if your debt is “time-barred” meaning the statute of limitations has run out.
Never admit the debt is yours whether that is over the phone, via email or in court. Doing so could reset the statute of limitations.
The FDCPA rules say the collection agency must answer consumer questions truthfully.
Rule 7: Check for Fake Debt Collectors
The only phone call worse than the one from the debt collection agency, is one from a fake collection agency.
Fake collection agencies use the same intimidation tactics, the same threats of arrest and the same claims that they will tell family members about the debt if you don’t pay them. Often, the fake collection agencies are trying to collect on “phantom debts” that are too old to collect or were never proven to be valid.
The Federal Trade Commission (FTC) shut down two fake collection agencies in Miami that had bilked Latinos out of $2 million in 2014. The FTC warned consumers this type of fraud was spreading to communities across the country.
The fake collection agencies use the same avenues to find debtors that real agencies use: databases that sell personal information; mailing lists; information from credit applications; calls to relatives, friends or employers; and forwarding addresses from the post office.
Know that you can’t inherit debt unless you were a cosigner. Collection agencies have been known to try to scam relatives into paying the deceased loved one’s debts. In these situations, the estate is responsible for the debts. Assets are used to pay creditors first, which could affect potential inheritance, but they cannot come after you to pay debts a relative is responsible for.
To stop the scam before it costs you, the FTC suggests that you ask the caller from collection agency to provide their name, the company’s name, their street address and business phone number. Verify each of the answers before talking to the caller again.
Rule 8: No Big Early Payments Required, No Deadline to Act
Most collection agencies work on a commission basis, so it is not unusual for collectors to tell a debtor that he or she has to make a large down payment on the amount owed. They may say that a hefty initial sum is required in order to prevent collection fees from growing, or that it is necessary to begin the process of eliminating the debt from their records.
What they don’t want you to know is that there is no such requirement. They merely want to get as much money upfront as possible to inflate their commission.
Debt collectors also may tell you that there is a deadline for payment and threaten you with dire repercussions if the debt is not paid within the prescribed timeframe.
There is no such thing as a deadline. It is a complete fabrication, one designed to get you to repay your debt as quickly as possible, because they know that the longer they wait to get paid, the less likely it is to ever happen.
Rule 9: Your Credit Is Damaged Already
Collectors often exaggerate the consequences of delinquency and non-payment. Threats are illegal under the FDCPA, but suggestions that your credit score will suffer or that your possessions may be seized are simply scare tactics with nothing to back them up.
In fact, if your debt already is in collection, your credit score already has been damaged and the potential loss of your possessions is pure fiction. What they don’t want you to know is that all they can really do is ask, cajole, and demand that you pay. The rest is bluster.
Rule 10: Don’t Give Up Personal Information
Sometimes, debt collectors will ask you for personal information – your bank account number, Social Security number, where you work, references from friends and colleagues. Why? To put together a “financial statement” they need to work out any repayment plan.
They don’t want you to know that they are merely fishing for information that will help them find you if you move, sue you if you don’t repay, or get into your bank records. There is no financial statement, and you should never give out proprietary information to anyone – ever.
Rule 11: Collectors Can’t Cross State Lines
Debt collectors also don’t want you to know that they cannot pursue you across state borders to enforce a judgment levied against you by a creditor who sued you for non-payment and won. Transferring the judgment to another state is time-consuming and expensive and not likely to occur very often.
Rule 12: There Are Limits to Garnishment
Debt collectors don’t want you to know that there are limits on the amounts they can legally garnish from portions of your income. For example, the maximum amount that can be taken from a paycheck is the lesser of 25% of your disposable earnings or the amount by which your wages exceed 30 times the federal minimum wage.
You can also file for complete exemption from wage garnishment, if you can verify that it will cause you or your family financial hardship to have any monies withheld.
Rule 13: There Are Options for Student Loan Debt
Debt collectors don’t want you to know that if you have student loan debt, while it still must be paid, you have the right, under the 1992 Higher Education Act, to set up a short-term payment schedule with the collection agency, requiring only “reasonable and affordable payments” – sometimes as little as $10 per month.
Successful completion of the student loan rehabilitation program (making nine out of 10 payments on time) takes the debt out of the collector’s portfolio and sends it back to the Department of Education. The collection agency loses its various commissions and bounties, and your loan is now being held under more favorable conditions.
Remember, high-pressure tactics by bill collectors are used solely to scare or bully you into paying them. While it is still your responsibility to square all your valid and legitimate debts, you don’t have to endure illegal, harassing or irritating activities.
Arming yourself with the right knowledge can help free you from the frustration – and empower you.
AUTHOR
Staff Writer
Max Fay is an entrepreneurial Millennial whose thoughtful writing shows he has a keen eye on both. Max has a genetic predisposition to being tight with his money and free with financial advice. At 25, he not only knows what an “emergency fund” is, he already has one. He wrote high school and college sports for every major newspaper in Florida while working his way through Florida State University. That experience was motivation to find another way to succeed financially and he has at Debt.org. Max can be reached at mfay@debt.org.
Changing attitudes towards debt
There was a time when debt had a stigma and bank managers were figures of authority.
Bankruptcy was reserved for the desperate. Customers nowadays may associate banks with reckless lending or Forex manipulation rather than their friendly local bank manager. And research suggests that what some people prioritise when the cash flow runs low are their cell phone and their credit card. To be disconnected is to be disenfranchised. Meanwhile, since owning your own home has become a distant dream for more and more people, there is less motivation to maintain a perfect credit score. Reinforcing these trends, social media have revolutionised the range of information available to people in debt. A swift online search returns details of debt forums where people share hints, tips and – sometimes – debt avoidance strategies. Customers can easily research the different processes used by debt collection agencies, including what type of letter to expect, in what order, and how best to respond. While much of the advice may be bogus or misleading, it still creates work for a collections team.
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