Collection agency

A collection agency is a business that specializes in pursuing payments of debts owed by individuals or businesses. These agencies are often used by creditors when they are unable to collect outstanding debts through their internal collection processes. Collection agencies operate under various models – some purchase the debt from the original creditor at a fraction of its value and then collect the full amount for themselves, while others collect on behalf of the creditor for a fee or a percentage of the total amount recovered. They use a range of methods, including letters, phone calls, and legal action, to collect debts. Collection agencies are regulated by laws that protect consumers from abusive or unfair practices. Their involvement is typically seen as a last resort for creditors and can have a negative impact on the credit score and report of the debtor.