Debt collectors are heroes or villains, depending on your point of view. If you own a business and owe money, hiring a debt collector can help you get it back. If you owe money, you may avoid that confrontation from a debt collector.
However, whatever your feelings about debt collectors, also called bill collectors, good people simply do their jobs. Here’s what a debt collector is and what they do.
What is debt collection?
Debt collection is an industry that exists to help businesses, large and small, get the money they owe. debt collectors Working for debt collection agencies, with the aim of getting people to pay what they owe. It can be a stressful and rewarding job all at once. Debt collectors face a lot of people who often want to pay their bills but can’t; At the same time, debt collectors are helping businesses, many of which cannot let unpaid bills slide.
There are a lot of reasons why someone might end up owing money to a company. According to the Consumer Financial Protection Bureau, $88 billion in medical bills is currently with debt collection agencies, affecting 1 in 5 Americans.
The task of the bill collector is to try to help a person pay what he owes, which would help improve the credit score of the debtor, as well as help the employer.
If you work as a debt collector, you will likely be in a call center at a collection agency, not the original creditor’s office. While it seems like it can be a stressful job, it does indicate that it is a profession with average work pressure. There are a lot of advantages too, especially if it’s a full-time job with benefits. The barriers to getting a job tend to be low – you’ll need a high school diploma – although you may need more education if you want a higher paying job. Many bill collectors report having a healthy work-life balance.
How do debt collection agencies work?
Debt collection agencies have one main task – to convince someone to pay back the money they owe a debt. Often, if the debt is large, this is done by arranging installment plans. Generally, debt collectors will contact debtors by phone or mail. A new rule issued by the Consumer Financial Protection Bureau that took effect on November 30, 2021 states that debt collectors are allowed to contact debtors via email, text and social media. If a debt collector communicates via social media, it should be through a private message and not, say, on a Facebook thread that everyone can see. There must also be a way for a social media user to opt out of communication via that platform.
There are two main types of collection agencies: first-party creditors and third-party creditors.
A first party creditor is not so much a debt collection agency as it is a debt collection suite, or a branch or subsidiary, of a corporation. If you had someone from your credit card, car loan lender, or financial institution entice you to catch up on the loan, you worked with a first-party creditor.
Third party creditors are collection agencies or debt buyers. These collection agencies are often set up by first-party creditors, often 30 days after the bill is due and once the first-party creditor feels there is no point in spending more time and effort on debt collection.
Often, a third-party creditor buys the right to try to collect the bill within 30 days to six months – and possibly longer, such as a year, two years or more.
These collection agencies are expected to collect debts in a responsible manner. For example, they are not allowed to belittle or harass you. They can’t send someone to your house to ask for money. They are not supposed to call more than seven times in any seven day period, and if you speak to a debt collector, they should wait seven days before calling you again. They aren’t supposed to call you at work either, before 8am or after 9pm
But some debt collection agencies have gone too far, ignoring these rules. In 2021, the Federal Trade Commission issued more than $4.86 million in refunds to consumers affected by illegal debt collection practices.
However, there are plenty of reputable debt collection agencies out there, and they provide a much-needed service. If you are a small business owner and can’t stand the money scam, a debt collection agency can be a life saver.
In terms of how they make their money, debt collection agencies sometimes work on commission – they will get a portion of the debt repaid to the company. And sometimes a debt collection agency, or debt buyer, buys the debt. According to the Minnesota Attorney General’s website, "It is not uncommon for a debt buyer to pay less than five cents for every dollar owed."
So debt buyers can buy $1,000 of debt for $50 or less. If the debt buyer manages to convince the person who owes the money to pay $1,000, that means a profit of $950. If the debt buyer can at least convince the debtor consumer to pay, say, $300, that would still be a $250 profit.
What do you do if a debt collector calls you?
The only thing you should do is pause for a while. It doesn’t mean you shouldn’t pay off a debt, but you do have some information to gather first.
For starters, the person you’re talking to may not be a true debt collector.
“One of the biggest problems with paying debts, especially student debt, is the persistent problem of fake phone calls from debt collectors as well as from those offering debt relief,” says Melanie Hanson, senior editor at EducationData.org, which provides data on the US education system. Knowing exactly who to trust in this environment can be difficult.
Hanson advises: "As a good rule of thumb, never trust a phone call on its own merits."
She suggests confirming anything you hear over the phone about your student debt by checking with an online debt collector and, ideally, directly checking your loan accounts with lenders.
“Fake fundraisers and fake relief programs thrive on getting personal information from naive debtors who think they are talking to a responsible person,” Hanson says.
Ashley Morgan, the bankruptcy attorney who owns Ashley F. Morgan Low in Herndon, Virginia, agrees that you don’t want to hastily agree to a debt payment, even if you’re pretty sure you owe money.
"If a debt collector calls you, it’s important to check the debt," Morgan says.
She also advises against admitting over the phone that you owe money. After all, you probably don’t, and this is not the time to give you ammo for debt collection that they can use against you later. Instead, Morgan says, "You should ask them to send you written correspondence about the debt they think you owe them."
Once you have this information, if you have any questions about debt, you should submit a request for information through writing, Morgan says.
“The information needed is important to help you know whether the debt is actually owed, and whether the collector has the ability to collect the debt,” Morgan says. It indicates that the debt may be subject to statute of limitations. After three to six years, and possibly longer – it depends on state law – debts often cannot be collected. As in, no one can sue you for debt.
In fact, you may want to be careful about making a partial payment on very old debts. In some states, if you do that, the time period will resume, and suddenly the statue of limitations may not run out for many more years.
It also helps to know everything you can know about Consequences of not paying debts – Like seeing your credit score drop. Remember that you can Negotiating with debt collectors Get them to agree to let you pay less than they’re owed. Find out your rights with a debt collector, so you can find out if you should report them to the Federal Trade Commission or the Consumer Financial Protection Bureau. Some of the tactics that debt collectors should not do include:
- I call you before eight in the morning or after nine in the evening
- Call you frequently.
- Post any messages on social media about your debts.
- Use vulgar or obscene language while talking to you.
- making threats.
- Publish lists of people who refuse to pay debts. (However, they can report the information to the credit reporting company.)
- Lying about how much you owe.
- He lied to you at all. (They can’t, for example, tell you that you’ll be jailed if you don’t pay. They can’t call you pretending to be someone else.)