Collection Agencies

Collection agencies are businesses that exist purely to pursue payments on debts owed by individuals or businesses. The majority of collection agencies operate as the agents of creditors. They collect debts for a fee or percentage of the total amount owed.

While many agencies are agents of creditors, some of the collection agencies purchase debts from creditors for a fraction of the value of the overall debt and then pursue the debtor for the full balance. These agencies are known as “debt buyers.”

Creditors usually will send their debts to a collection agency in an effort to remove them from their accounts receivable records. The difference between the amount collected and the full value of the debt is then written off as a loss. These agencies and their practices are governed by laws that prohibit abusive practices. If an agency does not adhere to the laws, the debtor may file a lawsuit or there may be government regulatory actions.

First party agencies are really departments or subsidiaries of the company that owns the original debt. These parties typically get involved earlier in the debt collection process and have a much greater incentive to try to maintain a constructive customer relationship. Third party agencies are more typically given the term “collection agency.” They work for the original debtor on a fee basis that is either a percentage of the debt owed or a per-collection fee.

Contact a Boston Bankruptcy Lawyer

If you are facing repeated calls from collection agencies and other groups demanding to be paid and you are considering bankruptcy to get away from the phone calls, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346.