Collection Agencies

A Collection Agency is a company that engages in the practice of buying and selling defaulted debts for the purpose of collecting said debts from the original debtors. The industry can be quite profitable because these debts are usually purchased from the original creditors for pennies on the dollar, but can still be collected for the full amount. Collectors are bound by the FDCPA to engage in ethical practices in the collection of these debts. Some collection agencies only purchase debts that are within the statute of limitation of collections for the state in which the debt is owed, and thus they have the legal right to force the debtor to pay the debt through the courts, though often these agencies simply contact the debtor directly in order to extract payment. However, many collection agencies purchase debts that may or not be within statute but attempt to collect regardless of the legality of such action. These companies are usually referred to as Junk Debt Buyers, and are often cavalier with regards to the FDCPA. Some collections agencies do not purchase the debt from the original creditor, but rather acts on the original creditor's behalf to collect. This type of collection agency charges the original creditor a fee for their service.