Debt collection agencies are used by creditors that needs to collect money when the they don't have the time, resources or patience to effect collections on their own. Collection agencies are experts in getting people to resolve money issues, they have trained staff that specializes in debt negotiation and skip-tracing. This training covers a broad range of FDCPA, legal and debt collecting skills as well as a proven process for going after accounts.

As a creditor, when you hire a collection agency, they are assigned the job of collecting the debt. Normally, if the agency is successful in debt collection the collection agency will retain a percentage of the amount collected as payment for services.

Some agencies will buy the accounts but most will not. The debtor does not actually owe the collection agency any money but they still owe the debt to the original creditor. By law the collection agency must provide, if asked, proof of the debt (known as validation of debt) that they have been assigned the account for collections on behalf of the creditor.

Occasionally, collection agencies will purchase the debt from the creditor. However, usually all that the collection agencies acquire is the right to carry out the process of debt collection.

Every US based collection agency is subject to the F.D.C.P.A and is not permitted to collect on fraud accounts. They will take every legal remedy available to enforce the collection of accounts that are outstanding. This includes going to court.

You should use a collection agency when -

you know the debtor has the ability to pay the debt is due there are no announced reasons for not paying

A debt collection company will attempt to collect via a letter writing campaign which can be effective, if occasionally slow, but it may not lead to recovery when -

the debtor has or thinks he or she has a valid excuse the amount past due is disputed there is an unrelated claim against you the debtor's solvency is in doubt or there is the possibility of bankruptcy there is security to recover or a possible prejudgment remedy

If any of these circumstances occur, the creditor should for their own legal protection retain control of critical decisions such as if and when to litigate, what attorney to retain and any other decisions made prior to or during litigation. This is particularly important where the creditor has a long term interest in retaining the customer as his client. Not retaining control of critical decisions and proceeding without the advice of an attorney could leave the creditor open to adverse legal liability.

The option exists where this is not the case and the creditor is not interested in the outcome of a debt collection, beyond getting his money, to sell the debt to a debt buyer.

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