How Do Collection Agencies Work?

How Do Collection Agencies Work?
by Justin Maas

From time to time you may come into contact with a collection agency. Often times people get upset at the collection agency for pursuing them, but that's because they don't comprehend how a collection agency works. The main goal of a collection agency is debt collection. It is their job to get the money you owe back to the creditor. Don't kill the messenger.

The first thing you should know is that collection agencies often work based off of a commission. This means if they don't get you to pay the money you owe they don't get paid themselves. This is why a collection agency will bug you week after week If they don't bug you then you won't repay your debt and they won't get paid. When a collection agency isn't making any money they go out of business. Debt collection is the one way they can make money, so they make damn sure they collect the debts sent to them.

Next you should understand the primary ways a collection agency works to recover a debt. They will most often contact you either through the mail or over the phone. The letters they send are usually form letters that just have your name and the amount of money you owe placed in a blank space. The letters are almost never written in a mean tone. They are just there to remind you about the money you owe and show you that steps towards debt collection are being taken. The phone calls will be the same thing, just a reminder that you owe the money and it needs to be paid before further actions are taken.

If you don't pay attention to the letters and calls from the collection agency they may take you to court. This isn't what you want to happen as it can lead to you losing your personal belongings and having your wages garnished. It is necessary to know that a collection agency can absolutely do more than just send letters and make phone calls. Make sure you are aware of this and don't force the collection agency to take more serious actions.

Now if you are ever forced to come into contact with a collection agency you will have a better understanding of what they do and why they are doing it. Do not ignore them as it can only lead to more problems for you.