Important Information About Collection Agencies

There are many misconceptions about collection agencies going around, so we’re going to take a look at exactly what a collection agency is, how they operate and how you should deal with them.

One of the side effects of a slow economy is that many people fall behind on their bills. While most are able to at least make the minimum payments, many others simply don’t have enough money at the end of the month to pay their obligations. When people fail to pay for an extended period of time, companies will often turn the debts over to collection agencies – either in-house or an outside firm.

Third party agencies like Pay Star agree to take on the task of collecting debts because they’re given a percentage or commission of the money they’re able to retrieve. If a debt runs in the tens of thousands of dollars, this percentage can be pretty large, which is why many collection agencies go hard after people to get them to pay.

Some collection agencies will also purchase the bad debts (called charge-offs) from companies for less than their value. This benefits the companies who originally owned the debts because they get money up front and don’t have to deal with the headaches of collecting anymore. And, since the chances of recovering debts decreases significantly as time goes on, many companies are happy to rid themselves of these debts while gaining some cash to recoup some of their losses.

Collection agencies have several tools they use in order to get the money that’s owed to them, the most popular being letters and phone calls. Letters generally start out as friendly “reminders” and become more forceful in their tone as time goes on. The thing to keep in mind is that these agencies generate thousands of these pre-written letters, so the debtor shouldn’t take them personally.

It’s important to keep in mind that all collection agencies must provide proof that you in fact owe the money they’re intending to collect. Although they should provide you with documentation regarding the initial debt when they first contact you, many don’t, and you should always request that information in the event that they’ve targeted the wrong person or if you already paid the debt beforehand.

If letters don’t get a reaction from debtors, agencies will resort to contacting you over the phone. Individual collectors will usually be assigned a batch of accounts and they spend their days calling debtors trying to negotiate a full payment or set up a payment plan. Anyone who has dealt with these collection agents knows how intimidating many of them can sound, and the reason for this is that these people usually get bonuses or commissions if they’re able to get the money.

When dealing with zealous collection agents you must keep in mind that they are not legally seize any of your assets even though they may claim otherwise. And while the word lawsuit is thrown around, the chances of a collection agency suing you is relatively low, especially with small debts.

Also, it’s important to keep in mind that there’s almost always room for negotiation either in the amount of monthly payments or in the total amount owed. If you can only afford to pay $100 a month on your debt – and make a good faith effort to do that – they can’t turn you down no matter what they may tell you. It’s always better for you to offer to pay something rather than nothing.

Most collection agencies like Pay Star are reputable and are willing to work with you. The thing to remember is to always be polite and to not let yourself be intimidated by overzealous agents.

You can find out more about debt collections and how to pay your debts by visiting www.paystarintl.com.

Additional Resources

Paystar International :: Home Page

Paystar International :: Article on Betaflow

Paystar International :: Listed on Review-inc.com

Paystar International :: Information on Incprofile.com

Paystar International :: Article on 800review.com

Paystar International :: Article on 4WorkLife