Many people never expect to find themselves in debt, but circumstances beyond a person’s control can sometimes result in them falling behind on their payments. When this happens, their creditors may choose to pass the debt on to a collection agency to try to recover what they are owed. Some countries have laws that regulate how collection agencies operate and the tactics they can use.
There are several different types of debt collectors, with some being departments or subsidiaries of the original creditor and others being third-party companies that are contracted by a company to collect their debt for a percentage of what they recover. Some of these companies are small and specialise in collecting specific types of debt while others are large and operate across multiple countries.
The first step in finding the right debt collection agency for your business is to understand what they can and cannot do. The FDCPA (Fair Debt Collection Practices Act) specifies that debt collectors must not abuse you in any way. For example, they cannot swear at you or use obscene language; threaten to harm your property or reputation; lie about who they are or what their job is; or call you before 8am or after 9pm; and they cannot call your employer (although healthcare providers may). They also can’t talk about your debt with anyone else (including your family, friends, or co-workers) or make public the fact that you owe money.
A good debt collection agency will work with you to lay out a payment plan that works for both parties. They will also keep records of the specific negotiations and promises made with you, so if anything does go wrong, you have proof that you complied with a promise that the collector gave you.
In some cases, debt collection agencies will contact your employer to verify employment and/or income information, but only if you or your attorney consented in writing for them to do so. In addition, if the debt is for a medical debt and you have a healthcare provider-patient relationship, then the debt collector can contact your employer to see if they have any medical insurance coverage for you.
If you don’t believe you owe the debt, you can write to the debt collector within 30 days of being contacted and tell them that you don’t think you owe it. The agency must then send you a written notice called a “validation notice” that shows the amount it believes you owe and who owns the debt.
The validation notice must include: the name of the creditor who is trying to collect the debt; a full itemisation of the debt, including interest and charges; and how you can dispute the debt in writing. If you do not receive this notice, or if the debt is not valid, then you can stop paying it. If you do not stop paying, the creditor can take legal action against you. If you stop payment, you should be sure to notify the collection agency in writing.