Home » Glossary » Debt Collection Agency

Debt Collection Agency

Debt is something that most people have to live with, one way or another. For many people, debt is a daily part of life, but a problem can arise when someone isn’t able to pay their debts. Additionally, if someone chooses not to deal with their debts, they can end up with serious problems, as the company who loaned them money wants that money back.

Most people aren’t exactly keen on paying their debts. That’s why there often has to be an organization that’s dedicated to tracking down people who haven’t paid their debts and forcing them to do just that. These are debt collection agencies, and with the right tools, a debt collection agency can be extremely well run.

What is a Debt Collection Agency?

A debt collection agency is a company that helps companies bridge the gap between the debtor and the creditor. Specifically, if a company has an overdue debt that they feel like they’re not going to be able to collect on, they might look for a debt collection agency to do that work for them. The company might sell the debts outright to the debt collection agency, allowing them to collect however they like, or the company might hire the debt collection agency to work for them, giving them specific requirements for the collection process.

How does a Debt Collection Agency Contact Debtors?

The first step for a debt collection company is to contact the debtors as quickly and quickly as possible. That way, they can establish that they’re trying to collect on a loan, which means the debtor can know that they have an outstanding debt. These are all ways an agency might try to contact debtors:

  • Through the mail
  • By phone
  • In-person
  • By email

As you can see, the process of contacting a debtor may be a process that’s available through multiple avenues. Most of the time, legally, a debt collection agency has to send a notice through the mail, but after that, they might expand to other ways of getting in contact with a debtor.

How does a Debt Collection Agency Collect on Debts?

The actual process of collecting a debt may vary depending on the debt collection agency’s options, the size of the bill, and the individual’s ability to actually pay. Here are a few of the ways a debt collection agency may collect on a specific debt:

  • Creating a payment plan
  • Collecting a small portion of the debt
  • Working with a debtor through bankruptcy
  • Going through a court

In many situations, a debt collection agency may have purchased the debt for pennies on the dollar. That means the collection agency has plenty of leeways when it comes to collecting the debt; they don’t have to collect a significant portion of the debt to still make a profit. That’s why debt collection agencies may allow you to pay a little more leniently.

Can Enformion Help Debt Collection Agencies?

If you’re running a debt collection agency, you know how absolutely crucial information is. Information is what allows you to contact the individual in the first place, what allows you to find creditors selling debt, and what lets you learn more about your current clients. With Enformion, you’ll be able to gather as much information as possible on all the people you deal with.