Banks and other lenders as well as independent collection agencies perform credit collection functions. A variety of collection functions can be used in recouping outstanding debts from consumers who have fallen behind in their payments. Each company follows its own business model, collecting debts using a variety of strategies, but the method must follow the requirements of the Fair Debt Collection Practices Act.
An organization designates the credit collection function to be either centralized or decentralized. The key to this function, whether branches or a central office perform the function, is standardization. Inside the company, the credit collection management team adopts specific procedures to collect payments from borrowers pursuant to their individual situations.
Collection functions must include built-in controls. An organization adds controls, such as quality control monitoring of debt collection phone calls and correspondence and supervisor approval of payment plans and settlements, to ensure consumers are treated appropriately. Under the Fair Debt Collection Practices Act (FDCPA), consumers are protected from debt collector practices that are deceptive, abusive or unfair. When you are contacted by a debt collector, you should keep notes and ensure that the specifics of this contact do not violate your consumer rights under this act.
Most debt collectors use phone calls to attempt to collect debts. Even small business owners must use practices to get unpaid accounts current. As a consumer, you should know your rights regardless of the type of company contacting you. Even companies not regulated by the FDCPA should follow good business practices by not abusing or deceiving you during phone calls. You should not be contacted before 8 a.m. or after 9 p.m., and a creditor cannot call your line multiple times in one day. Some companies put your phone number on auto-ring, and you may be called more than once a day. You should keep track of the number of times a company calls you each day, and you may consult an attorney to file a complaint against a debt collector that harasses you.
Handing Over Accounts
Lenders and companies, even small businesses, initially may try to collect debts from consumers directly. After a certain amount of time with an unpaid balance, such as 90 days, 120 days or 180 days, a business may decide to transfer an outstanding account to a credit collection agency. If you've had an outstanding medical bill, you've probably received a letter from the provider stating that this is your final notice before your account is turned over to collections. When you're ready to make payments on an account, you must determine whether you should pay the original creditor or the credit collection agency.