Collection Agencies: What Do They Do?

Collection agencies are businesses that collect past-due bills and accounts receivable for other persons or businesses in exchange for a fee. Collection agencies charge for their services one of three ways:

1) A flat fee.

2) A percentage of what is collected.

3) Through a direct sale of the delinquent accounts.

If you are trying to collect a small or medium sized debt, using collection agencies that charge a flat fee are probably your best option - collection agencies that charge a flat fee work just as hard to collect a small debt as they do to collect a large debt.

If you have just a few large unpaid receivables, working with collection agencies that charge a percent of the total debt collected is a wise choice. (usually 25 to 50 percent).

The third option, selling your uncollected receivables at a discount to certain collection agencies is advisable only if you have a very large amount of debt - usually $1 million or more. The selling price is typically a minuscule 2 to 8 cents on the dollar.

Most collection agencies use one of three tactics to collect debt:

1) Letters.

2) Direct contact via the telephone.

3) Litigation.

Typically, collection agencies begin the collection process by sending a series of notification letters, often called demand letters. The final notification letter generally warns the debt dodger that if the past-due account is not paid by a certain date, his or her name or company will passed on to more intensive collections.

Many collection agencies also pay their staff to phone the debtor directly. This direct contact is most useful in turning up the heat on debtors who have identified themselves as having no intention to pay their bill.

Litigation - in small claims court or a full-scale courtroom - is a final option.

Besides sending out letters and making phone calls, some collection agencies also specialize in locating debtors who can no longer be reached at the address or phone number listed on their accounts. To determine whether certain collection agencies offer this service, ask them about their "skip tracing" abilities.

Collection Agency Outsourcing - Outsourcing accounts receivable to a professional collection agency has become a popular alternative to attempting to collect receivables in-house.

---

Bankruptcy vs. Credit Counseling: What Should I Do?

Credit Counseling and bankruptcy are both ways to relieve the... Read More

Update Your Computer System With Bad Credit Computer Financing

The moment I placed myself in front of the computer... Read More

Common Credit Score Myths

A lot of credit score myths about fico score ratings... Read More

Dealing With and Repairing Bad Credit

Bad credit can be a burden for otherwise good credit.... Read More

Credit Cards And Loans - So Many Options - So Little Time

Credit Cards and Loans sounds like just two things, but... Read More

Credit and Loan Help for Mortgage Loans

Mortgage loans are some of the most difficult loans to... Read More

Sound Advice For First Time Credit Card Users

If you are just entering the world of credit cards,... Read More

Guide to Credit Terms

Listed below is a useful guide to credit card terms.... Read More

What You Need to Know about Debt Negotiation on Credit Cards

Debt negotiation on credit cards is often referred to as... Read More

Always Avoid Payment Holidays

Once you've been paying off a credit card for a... Read More

What Is A FICO Score?

A credit score is most commonly known as a FICO... Read More

Finance - Money, Money

Finance is a big word for some of us. It's... Read More

Good Credit Is a Necessity for Everyday Living

Most of us want a good credit report to obtain... Read More

4 Steps to Creating Good Credit

As a consumer you've learned the importance of establishing a... Read More

What Does Your Credit Say About You?

A credit report is more than just a snapshot of... Read More

What Are The Most Common Credit Card Mistakes?

Now in a world with so many easy to get... Read More

Home Loans ? Repair Your Credit Before You Buy

Before you take out a home loan or make any... Read More

What is Credit Counselling?

Ever wondered what is Credit Counselling? There are occasions when... Read More

Annual Credit Report and Free Annual Credit Report

Getting an annual credit report review has been the advice... Read More

Credit Card Rates - Negotiating Rates with Your Credit Card Company

Ok, let's face it, everybody hates high credit card rates,... Read More

Grants, Loans, Free Credit Cards And Credit Repair: The Whole Truth And Nothing But The Truth

You got creditors calling you everyday. You could lose the... Read More

Fixing A Credit Report

Fixing a credit report starts with seeing what's on it.... Read More

How To Establish Great Credit

Building a good credit history is important. If you have... Read More

Tips for Credit Card Surfers

Moving money from credit card to credit card to take... Read More

Maximizing Credit Card Rewards

In their quest to get you to sign up for... Read More

How To Avoid Becoming A Victim of Identity Theft

With identity theft statistics currently at an all time high,... Read More

What is on Your Credit Report?

Your credit report is a very important piece of the... Read More

Credit Card Traps: How To Spot Them On The Spot!

They arrive in your mail - a conspicuous looking mail... Read More

Identity Theft ? Monitor Your Credit Report

The recent security breach at credit card processor CardSystems Solutions... Read More

Credit Card Disclosure Table ? Do You Understand It All?

In addition to the APR (annual percentage rate) and the... Read More

What Is a FICO Score and How Do I Make It Work for Me?

Whether or not you receive a loan and what interest... Read More

Identity Theft - How to Protect Yourself

"Like the tan? I got tons of sun on that... Read More

How to Repair a Bad Credit Rating

If you have a bad credit rating, then you might... Read More