Debt Collection Agencies : Understanding a Growth Industry

Author: Martin Mcallister

Consumers in the UK collectively owe in excess of £1 trillion according to recent media reports. Much of this debt is due to borrowing on credit cards, bank loans and mortgages; but as consumer borrowing increases, so does the amount of people encountering financial difficulty in paying back what they owe.

As a result, more and more financial agreements are becoming delinquent and are subsequently passed from the original lender to a debt collection agency. Debt collection agencies are businesses that collect past-due bills and accounts receivable for other persons or businesses in exchange for a fee. Collection agencies charge for their services in one of three ways: a flat fee, a percentage of the amount recouped, or more commonly through a direct purchase of the delinquent account.

Attempts to collect small or medium sized debts are best done using debt collection agencies that charge a flat fee for their services. These agencies are likely to work just as hard at collecting a small debt as they are in trying to collect a larger debt.

The third option is rapidly becoming the most popular among the larger financial institutions as they seek to cut their losses and free up resources away from debt collecting. In most cases, these financial institutions have large portfolios of outstanding debt, and selling it on to debt collection agencies allows them to recoup some of the money loaned out and free up costly resources away from chasing the delinquent debt.

In order to collect due debts most collection agencies will use one of three tactics: letters, telephone calls, litigation. Typically, debt collection agencies will begin the collection process by sending a series of notification letters, often allowing the debtor to enter into negotiations to repay the debt. These letters are often called ‘demand’ letters. The final notification letter that is sent out generally warns the debtor that if no contact is made prior to a certain date then the debtor’s name - whether it be an individual or a company – will be passed onto a more intensive method of debt collection.

In addition to letters, some collection agencies might also phone the debtor directly, again allowing the debtor to work with the agency to agree a plan to repay the debt. Telephoning a debtor at home can sometimes have the best results in collecting a delinquent debt. The third method, litigation, is a last resort and is generally only used when all other attempts to reclaim the debt have failed. Litigation involves taking the debtor to a small-claims court and could eventually result in the debtor being made bankrupt, depending on the amount of debt owed.

Other services provided by debt collection agencies include locating absent debtors who can no longer be reached at the address or telephone number listed on their accounts. Some agencies also offer ‘doorstep’ collection, whereby they employ a number of collectors to visit debtors in their homes to arrange the repayment of debts owed.

Debt purchasing is becoming big business in the UK with many specialist debt collection agencies, such as Capquest Debt Recovery, providing advice on how best to proceed with the recovery of unpaid debt. Should you have a need to employ the services of a debt collection agency make sure that they are members of the Credit Services Association, a regulatory body associated with the debt collection and financial industries.

Article Source: http://www.articlesbase.com/credit-articles/debt-collection-agencies-understanding-a-growth-industry-108392.html

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Capquest is a member of, and are regulated by the Credit Services Association.

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Some people like to deal with their credit card debt all by themselves. However, some people do use credit card debt settlement agency. There can be various reasons for going for a credit card debt settlement agency. Some people use a credit card debt settlement agency because they are not comfortable in dealing with credit card debt settlement by themselves. Some go for a credit card debt settlement agency because they don't have the time to do the research and evaluate options for credit card debt settlement. Others just want professional advice and hence they contact credit card debt settlement agency.

Whatever be the reason for employing a credit card debt settlement agency, a good credit card debt settlement agency would surely be of help. However, it's important that you select a good credit card debt settlement agency. Do not fall for ads of credit card debt settlement agencies that promise to wipe off your debt overnight. No credit card debt settlement agency or anyone else can do that. You should select a credit card debt settlement agency which has verifiable credentials or a credit card debt settlement agency that you know has a good reputation. If some friend has been through this process previously, they might be able to recommend a credit card debt settlement agency to you. Sometimes you will find ads that promise impossible things and ask you to call a telephone number that's a premium line. So beware, or else you might end up paying heavy phone bills that would just add to your debt. Some credit card debt settlement agencies might be having a very low fee but no reputation. These are again the credit card debt settlement agencies that you should avoid. However, once you find a reputable credit card debt settlement agency, do not try to hide debt related information from them, no matter how bad your debt it. That is another reason for looking for a reputable credit card debt settlement agency. If the credit card debt settlement agency is not a reputable one, you would not be able to trust them; and trust is very important here otherwise you will neither be able to tell them the full story and nor follow their advice. That said, it's important to note that no credit card debt settlement agency will be able to help you if you are not ready to help yourself. So, follow the advice given by credit card debt settlement agency and practice good spending habits.
Some people like to deal with their credit card debt all by themselves. However, some people do use credit card debt settlement agency. There can be various reasons for going for a credit card debt settlement agency. Some people use a credit card debt settlement agency because they are not comfortable in dealing with credit card debt settlement by themselves. Some go for a credit card debt settlement agency because they don't have the time to do the research and evaluate options for credit card debt settlement. Others just want professional advice and hence they contact credit card debt settlement agency.

Whatever be the reason for employing a credit card debt settlement agency, a good credit card debt settlement agency would surely be of help. However, it's important that you select a good credit card debt settlement agency. Do not fall for ads of credit card debt settlement agencies that promise to wipe off your debt overnight. No credit card debt settlement agency or anyone else can do that. You should select a credit card debt settlement agency which has verifiable credentials or a credit card debt settlement agency that you know has a good reputation. If some friend has been through this process previously, they might be able to recommend a credit card debt settlement agency to you. Sometimes you will find ads that promise impossible things and ask you to call a telephone number that's a premium line. So beware, or else you might end up paying heavy phone bills that would just add to your debt. Some credit card debt settlement agencies might be having a very low fee but no reputation. These are again the credit card debt settlement agencies that you should avoid. However, once you find a reputable credit card debt settlement agency, do not try to hide debt related information from them, no matter how bad your debt it. That is another reason for looking for a reputable credit card debt settlement agency. If the credit card debt settlement agency is not a reputable one, you would not be able to trust them; and trust is very important here otherwise you will neither be able to tell them the full story and nor follow their advice. That said, it's important to note that no credit card debt settlement agency will be able to help you if you are not ready to help yourself. So, follow the advice given by credit card debt settlement agency and practice good spending habits.

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A collection agency works in behalf of companies or creditors in collecting payment from their debtors. Debtors are protected by the FDCPA for any abusive collection agencies.

The term debtor refers to an individual who has a debt or owes a bill to a certain company or agency, and individual becomes a debtor due to some circumstances which makes them incapable of paying their debts as stated with the agreement. Some of the reasons include accidents causing an individual incapable of working, loss of job or any other unforeseen events that could affect their lives.

In commercial cases, debtors include corporations, proprietors or business owners who borrowed money for their business.

In cases where the debtor is incapable to pay, incurs overdue accounts or does not comply terms of payment, these creditors will then forward the debts to a collection agency. Upon receipt, the collection agency will do all necessary action in pursuing the payment of the debtors. The collection agencies earn from certain percentage of the money collected from the debtors.

These collection agencies are bound by government laws in order to prevent agencies from abusing their clients. The laws governing collection agencies differ from country to country.

Another option which has been developed in the United States is the debt buying. This system has tremendously grown as a profitable industry. Creditors sell their debts to these companies in order to gain some revenue from their receivables and avoid other legal suits resulting from debt collection. Debt buying is also gaining popularity in Asia, United Kingdom and the European region.

Almost all debt collectors of a collection agency are trained and motivated to ensure successful collection of payments. The most common method used is calling up the debtor through phone. The collectors are trained in positively convincing debtors to make payment. They are insistent without being too demanding.

The US government under the Fair Debt Collection Practice Act or FDCPA does not allow calls to any debtor if the call charge will be charged to the debtor. If the collector managed to talk to the debtor, it will do its best to build a good rapport with the individual or company who owes a debt and tries to provide some solutions by offering alternatives. The offer can be some sort of discount on the amount to be paid or a longer period of payment.

Collectors are allowed to call any of the debtor's relatives and neighbor to confirm the exact address of the debtor but should never reveal the information regarding the debt. In addition, the collector must be willing to provide his/her complete name and the employer when necessary.
In the United States, collection agencies would sometimes ask for the service of a collection lawyer. The lawyers will take charge in filing debt collection lawsuits in respective courts in behalf of the collection agency.

Once the lawsuit is filed, the debtor will then be notified by serving the court documents. In some cases, a Sheriff's Deputy will do the job. Upon receiving the lawsuit, the debtor must take action. If the debtor fails to respond on the given date, the court will grant the decision of default in favor of the collection agency.

The judgment favoring the lawyer of the collection agency will give the right to the collection agency to take necessary steps to collect payment from the debtor.

The most common method used as a result of the court's decision is by garnishing the salary of the debtor. This will be done upon the court's order of garnishment to the respective employer of the debtor. The debtor's paycheck will automatically be deducted by his/her employer a certain amount which will be given to the court and then goes to the lawyer of the collection agency.

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You can avoid being sued by a credit card collection agency. In most cases even if you have a lot of debt and you stop paying that credit card debt collector will not take you to court. It is very expensive to sue somebody over debt and in most cases the collection agency does not know if you have any assets or not. There are many ways that you can get into a negative financial situation with your credit cards. You always want to try to pay your credit card on time and paying off balances at the end of the month is the best way. many people do not have the money to pay off their credit cards.

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It is very important that you understand the laws so that you can't check yourself against collection agencies. Most of the collection agencies bend or break the laws in order to scare you to give them money. You as is a consumer have rights and make sure that any collection agency that tries to contact you does not step on those rights. There have been cases where the debt amount was very high and the collection agency decided to take the person to court. But the truth of the matter this does not happen very often at all.

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Remember that the best and most effective way to avoid being sued over credit card debt is to pay your debt on time. You need to also remember that you as the consumer have rights. Many collection agencies try to do anything they can legal or illegal to collect the money that is owed. You need to be aware that in most cases collection agencies never filed lawsuits against individuals because it is too expensive for them to do.

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Palisade describes itself as an "American diversified financial services company." They offer the following range of services:

•    debt collection services;
•    debt consolidation services;
•    collection agency software;
•    collection attorney software;
•    debt collection software;
•    credit card originating;
•    credit card processing;
•    bad debt servicing;
•    debt settlement;
•    and many other similar services.

Palisades, aka Asta Funding was ranked the absolute worst in customer service amongst competing collection agencies. Furthermore, they are proven crooks. Now, every collection agency has their share of disgruntled debtors that lash out. Palisades collection agency however, has lawsuit after lawsuit filed against them by those disgruntled consumers as well as the Federal Trade Commission itself.

Palisades was a key player in a long-running scheme with a multi-convicted criminal named Orazio Lembo. He would pay bank employees from Bank of America, Commerce Bank, Wachovia, PNC and several others for personal information, including the social security numbers, of account holders. There were more than 675,000 names in all. Palisades, aka Asta Funding, disguised as a New Jersey law firm named Pressler & Pressler, bought the stolen information, along with several other collection firms, and then used it to harass these people for outdated debts.

Numerous complaints emerged to the Department of Banking and Insurance against Palisades Collection Agency and attention was granted to them stopping the conspiracy. Prosecuting attorneys in New Jersey called the acts: "crimes that would make Al Capone blush." The official charges lodged against Palisades were called Grand Larceny - multiple counts.

When a debt collection agency engages in such activities, it should be banished from ever doing business again. The ringleaders of this atrocity should, of course, still be incarcerated with no chance of release. However, Palisades is still a thriving entity. The politics of the corrupt legal system have once again failed to truly protect consumers.

It would be highly recommended to be extremely suspicious if you are ever contacted by Palisades Collection Agency representatives. It's difficult to imagine how the US government allows these criminals to continue to operate. Certainly get everything in writing if you ever have the unfortunate displeasure of having to deal with them.

Asta Funding, aka Palisades Collection Agency goes a little further down the corrupt road that many collection agencies travel. They take abuse to a new level of lowness and offer the world just one more reason to be suspicious of organizations that have the power to affect our personal lives in so many ways.

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