What is a Collection Agency?
A Collection Agency is a financial institution that operates with regard to acquiring of debt from individuals who have failed to satisfy expenses incurred as a result of the use of products or services. Typically, a Collection Agency will not be the initial owner the debt in question; Collection Agencies negotiate with businesses or commercial operations who are the owners of respective debt belonging to consumers who have patronized the products and services offered by an individual business – however, for varying reasons, those debts failed to be satisfied. A Collection Agency can be made aware of outstanding debt and negotiate the transfer or sale of a respective debt; this transaction allows the Collection Agency to become the legal, rightful owner of the debt in question.
The Collections Process
Once a debt is purchased from a business, to which is typically referred as the ‘third party’, the Collection Agency will attempt to retrieve the debt from the individual who had incurred it. However, due to the legislation with regard to debt and collections, individuals cannot be incarcerated as a result of the accumulation of debt; this can result in a Collection Agency attempting to settle a debt through the following means:
The creation of a payment plan through which an individual can make period, scheduled payments
The consolidation of the preexisting debt into a smaller amount that will be required to be satisfied in a single, lump-sum payment
The sale of a debt to an institution specializing in repossession