The Role of the Debt Collection Agency
Debt collection agency is the procedure of seeking payments from people or companies owing money to credit companies. An agency which specializes in debt collection is called a debt collector or collection agency. They collect payments from people who owe money to creditors. In the United States, most collection agencies are government-owned and operated and have to pass an exam for licensing to operate. Collection agencies have to abide by the Fair Debt Collection Practices Act passed in 1994. The FDCPA regulates all the activities of debt collectors including: whether they can contact people not involved in debt collection activities; how they can conduct their collection activities; what they can charge for collecting debts; what they need to do to collect payment and where they need to send the payment if they collect payments.
Typically, an FDCPA accredited debt collection agency has the following duties: assess the debts owed to the company; collect payments; process the debts; disburse the collected payments; make reports of all activities; and file all payments received with the company’s prescribed organizations. Agencies generally do not undertake any investigative activities. They simply obtain information about an account holder and follow certain steps to collect the money owed. Generally speaking, these activities are: assessing the debt, collecting payments and proceeding.
The FDCPA requires that the debt collector cannot engage in any unfair method or practice or take unfair advantage of any person. However, in order to prove your case as a victim of unfair debt collection practices, the debt collector needs to: be able to show that you, as the victim, agreed to any and all terms and conditions; show that you suffered actual and prospective damage as a result of the agency’s actions; show that you have actually experienced a negative impact on your finances as a result of the debt collection agency’s actions. In order to establish a case of discrimination, the debt collection agency must show that there was a practice of discrimination and that such practices were implemented because of your race, nationality, gender, religion, national origin or membership in a particular group.
A number of factors go into establishing the validity of a case. These factors generally include: the amount you owe; the amount you expect to earn monthly; the length of time you have held your current job; and the length of time you have lived in the area you are in. If an FDCPA investigation finds that you owe more than you are able to pay, the debt collection agency may negotiate with you to establish an alternate payee. This alternate payee is generally someone who will assume responsibility for the debt should you become unable to pay the full amount owed. If a debt collector can’t negotiate a settlement, they are required by law to notify you of their inability to negotiate and notify you of your right to pursue legal action. Debt collections agencies are required to warn potential customers of their negative actions if the customer does not settle the account within a specified time.
As noted above, you have the right to dispute the debts you owe. If you believe that you do not owe the money or that you are not eligible to receive the monies owed, you may want to consider sending a letter to the debt collection agency demanding verification of the amount you actually owe. You may also want to send this same letter to any third party that sent you a payment or agreed to accept a settlement. If a third party agreed to a settlement on your behalf, they are required by law to provide proof of the settlement should you decide to take legal action. As long as you have verified the validity of the settlement, you are not responsible for taking legal action against the other party.
Lastly, when you receive phone calls from a debt collection agency, it is important to remain calm and professional. Remember that these calls are only for emergency situations and that there may not be a legal basis to collect the debt in question. If you are contacted by a debt collection agency and you think that there may be a problem, you have several options available to you. You can discuss your options with a credit counselor, contact your past due accounts, or you can simply hang up the phone.