A debt collection agency is an organization which collects the due debts of an individual or a company on behalf of the creditors. It is a business which deals with the collection of different types of debts. There are different types of debt collection agencies which provide services of debt collection and recovery for clients. Different types of agencies which provide the services of debt collection are First-party collection agency, the third-party collection agency, and debt buyers. A first-party collection agency is the first department of any organization or company which deals with the debt issue. They are less aggressive of all the other types of collection agencies and provide more relaxation and time for the debtor to recover the debts. They give enough time to debtors to pay off the due debts and remind them through the mail and phone calls. If this situation continues then according to the debt they decide to take the help of a third-party agency.
A third-party debt collection agency is a private organization which collects the debts on behalf of the creditor. A creditor assigns the task of debt collection by providing all the details and accounts to them. These third-party debt collection agencies charge a fee on successful recovery of debts. Their fee is usually a percentage of the amount they recover for their client. They are more effective and aggressive in recovering the debts as they are only concerned with recovering the amount which will return them their fee.
That’s why these third party agencies use more resources and power to get debt recovery done in the shortest span of time. This results in more tension and pressure for the debtor as they are aggressively pursued by the debtors to pay quickly. Due to this reason FDCPA (Fair Debt Collection Practices Act) was approved which monitors and control the debt collection agencies from harassing the debtors.
Another type of debt collection agency is debt buyers. They often buy all the debts of a specific company. Now they own all the debt bought and will get the entire amount paid to them. As debt buyers have full control of the debt they sometimes more flexible options for debtors to pay off their debts.