If an individual or a business fails to pay its debts, several measures can be taken to ensure that this obligation is met. A Collection agency comes in if a person or a business defaults payment of a debt. Most of these businesses work on behalf of credits to get the debts paid and in return they are paid a certain agreed amount or a percentage of the debt collected.
These agencies can be categorized as a first party or a third party agency. The former collects debts in the initial stages of pursing the debts. This is due to the fact that there is a like hood that this agency will strive to ensure good relations with the debtor are maintained with the creditor. This is because these agencies are closed linked with the creditor if not part of them. They might be just a department or affiliated to the creditor hence ensures relations are salvaged.
The name first party agency is given due to the close relationship they have with the creditor if not part of that organization. The consumer, who is the debtor, is normally the second party. In case the debt retrival efforts by the first party prove to be futile, they might resolve to write the debt off or pass responsibility to the third party agencies.
Collection agencies are in fact the third party agencies. They earn a certain percentage of total debts collected. Their payments are made immediately the first portion of the debts is paid. This ensures they benefit in case the creditor resolves to terminate efforts to collect debts.
The fee paid to these agencies is typically between twenty and forty percent though it might be up to 50%. Hardly does the fee surpass this percentage.
These businesses in most instances send urgent letters demanding the debtor pays the debts promptly or face consequences like a hard collection or a credit report that is negative. These letters are typically sent within intervals of ten days. If there is no response, then a hard collection would be a possible response.
Many countries have however developed legislation that limits possible harassment or any form of unfair treatment of the debtor. This might include limiting the time a telephone call can be made to the debtor, protecting the debtor from threats or any illegal steps. The agency is also barred from misleading representations or discussing terms of the debt with a third party.
In the US and the UK, there are acts that govern agency actions. All agencies must be duly registered and licensed . In certain cases, an agreement is made by the agencies and the creditor. The former purchases all debts at an agreeable value and pursues them. In case of payment, it takes the full value. Among the advantages of this, is avoiding any bad blood between debtor and creditor in case of collection actions
These agencies can be categorized as a first party or a third party agency. The former collects debts in the initial stages of pursing the debts. This is due to the fact that there is a like hood that this agency will strive to ensure good relations with the debtor are maintained with the creditor. This is because these agencies are closed linked with the creditor if not part of them. They might be just a department or affiliated to the creditor hence ensures relations are salvaged.
The name first party agency is given due to the close relationship they have with the creditor if not part of that organization. The consumer, who is the debtor, is normally the second party. In case the debt retrival efforts by the first party prove to be futile, they might resolve to write the debt off or pass responsibility to the third party agencies.
Collection agencies are in fact the third party agencies. They earn a certain percentage of total debts collected. Their payments are made immediately the first portion of the debts is paid. This ensures they benefit in case the creditor resolves to terminate efforts to collect debts.
The fee paid to these agencies is typically between twenty and forty percent though it might be up to 50%. Hardly does the fee surpass this percentage.
These businesses in most instances send urgent letters demanding the debtor pays the debts promptly or face consequences like a hard collection or a credit report that is negative. These letters are typically sent within intervals of ten days. If there is no response, then a hard collection would be a possible response.
Many countries have however developed legislation that limits possible harassment or any form of unfair treatment of the debtor. This might include limiting the time a telephone call can be made to the debtor, protecting the debtor from threats or any illegal steps. The agency is also barred from misleading representations or discussing terms of the debt with a third party.
In the US and the UK, there are acts that govern agency actions. All agencies must be duly registered and licensed . In certain cases, an agreement is made by the agencies and the creditor. The former purchases all debts at an agreeable value and pursues them. In case of payment, it takes the full value. Among the advantages of this, is avoiding any bad blood between debtor and creditor in case of collection actions
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