What Is a Debt Collection Agency?
In essence, a debt collection agency is a mediator hired by businesses to recover past due payments.
Rather than chasing down clients directly, companies find it more practical and cheaper to hire debt collectors to collect unpaid debts. In addition, collection agencies are more likely to recover the bad debt than the original creditor due to their tools, resources, tactics, and training.
Why Hire a Debt Collection Agency?
Hiring a debt collection agency is often more practical and cost-effective for businesses than chasing down clients directly. Debt collectors possess specialized tools, resources, and training, making them far more effective at recovering bad debts than the original creditor.
When Are Accounts Sent to Collections?
There is no universal timeline for assigning a debt to a collection agency. However, most businesses consider hiring a collection agency once an account has been past due for 60 days or longer.
Some businesses may act sooner or later, depending on their internal policies and the nature of the debt.
How Does Debt Collection Assignment Work?
When a business assigns a debt to a collection agency, the agency is granted the authority to collect the debt on behalf of the original creditor. The agency typically uses a combination of communication strategies, including phone calls, emails, and written notices, to encourage payment.
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