How Debt Collection Agencies Operate

Generally, there a two types of debt collection agencies. A collection agency that pursues payments of debts from consumers on behalf of the creditor (credit card, mortgage debt, medical debt etc.) are called “Servicers.” Services are hired by the debt owner to try and collect the debt and they receive a fee or percentage of the total amount owed.

The second type of collector is the “Owner” or buyer of the debt after it has been written off by the original creditor.  This means that the debt collection company bought the debt, often for pennies on the dollar, from the company that was originally owed the money. Sometimes, the debt collector and the owner of the debt are the same, usually called Junk Debt Buyers. 

A debt collection agencies are required to contact the debtor (within five days of their first contact) with all of the rights granted by the FDCPA. You have the right to dispute the debt or seek validation within 30 days of receiving the validation rights mandated by the FDCPA. These are called your dispute/validation rights. Unless you dispute the debt, the debt collector can continue collection efforts including suing the debtor.  Seeking validation that the collector has the right to pursue you stops any further collection effort until they provide proper proof. Sending a cease and desist letter if you don’t want to be harassed is an option too. If they continue to violate your rights, we can help.

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