Debt collection agencies are hired by companies for the collection of their bad debts. Many companies have their in-house debt collection branches for this, but many others would prefer to hire the services of specialized agencies. Debtors are generally intimidated or scared of debt collection agencies, as they are ignorant of the powers assigned to such agencies. Of course, there are some unscrupulous agencies, which make debtors believe that they possess powers greater than they really have, but that doesn’t help the state of affairs.
Debt collection agencies are paid in two ways. One is to pay them a fixed amount, while the other is to pay them a percentage of the debt collected. There are agencies that in fact buy some debts straightway. This simply implies that, if a debtor owes money to a company, and that company sells the debt to a debt collecting agency, the debtor would legally be required to pay that debt to the agency. By selling to an agency, the company gets a some percentage of the total debt. Whatever amount the agency collects from the debtor is retained by the collector. Since the agency needs to collects more funds than what it paid to the company for buying that debt, it employs all kinds of tactics, and often indulges in some unwarranted practices.
Debt collectors are not empowered to enter your premises or take the possession of your belongings. In fact, they can only demand money from you. The point is that they keep calling upon the debtor time and again, and the dishonest collectors are known to threaten debtors with the intention of recovering the dues. On the other hand, a professional debt recovery agency would try to develop a helpful relationship with their debtors, and thus start the process of negotiation for recovering the debts. In many such cases, the debtor can expect a part of the debt to be written off.
Debt collectors are not expected to call upon debtors at awkward times, like too early in the mornings or too late in the evenings. Though they may call upon you at your workplace, they should stop doing so when being informed that you are not permitted to accept personal calls at the workplace. Debt collectors are not permitted to harm or threaten you in any manner or use abusive language. Nor can they make bogus claims about your debt, or tell lies about their legal rights or official rank, taking away your assets or getting you arrested.
The US has in place the Fair Debt Collection Practices Act to regulate the operations of the debt collection agencies. A number of states have framed special laws for the collection of debts and generally, when the state laws are thought to be more restraining compared to FDCPA, then the former are applicable. Likewise, debt collection agencies in the UK fall under the Office of Fair Trading with guidelines as to how debt collectors can operate. It also gives illustrations of unjust practices, like harassing or acting as if they had more powers than what they actually possess.