Business, Legal & Accounting Glossary
A company hired by a creditor to collect a debt that it is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, typically through letters (called “dunning” letters) and telephone calls. In the US, Collection agencies are regulated by the federal Fair Debt Collection Practices Act. Unfortunately, too many collectors ignore this law.
A collection agency is an organization that specializes in the collection of overdue debts. They are best known for hassling people who owe money by telephone or in-person with a knock on the door.
Creditors who feel that your bills are overdue and have failed to talk you into payment can decide to turn the bill over to a collection agency. The collection agency usually keeps a portion of the funds collected. They can also attempt to garnish wages.
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This glossary post was last updated: 4th August, 2021 | 3 Views.