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Debt Collection Agency
A debt collection agency refers to business that makes the payments on debts of other individuals or business firms. They operate as the agents of creditors or credit providers. They generally collect debts for a nominal fee or for certain percentage of total amount owed.
Some other agencies known as debt buyers will buy debts from the creditors for some amount on its face value and insist the debtors to pay the full amount balance. Creditors sell their debts to remove them from their accounts receivable records. This account is written off as a loss.
Debt collection agencies are popularly known for engaging in the threatening behavior, harassments etc But these agencies are governed by special laws . Several state and federal laws prohibits abusive practices. If agencies fail to stick to these laws , they may have to face lawsuits or other regulatory actions from the government .
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