What is a Debt Collection Agency?

A debt collection agency is an entity that helps lenders or businesses recover debts that are past due, according to the Fair Debt Collection Practices Act (FDCPA). Debt collection agencies are also called debt buyers and debt collection companies. If you own a small or medium sized business, you know that it’s normal to owe creditors, in most cases suppliers, or be owed. Given that collecting money or any other payment from debtors is no easy task, you may ask a debt collection agency to recover your money.

Having a debt company recover unpaid debts that have passed their due date is relatively fast and cheap compared to chasing the defaulters by yourself. However, debt collectors must adhere to the rules and regulations stipulated in the FDCPA. A collection agent can’t collect an old debt that has been rendered uncollectible; otherwise, they would have violated the FDCPA. Ensure that your debtor hasn’t filed for bankruptcy before you approach the debt collection agency. You’re not allowed to threaten and physically harm the borrower, or seize their assets.

How a Collection Agency Works

A collection agency has debt collecting tools that you don’t have. For example, the collection company can easily track the debtor whether they change phone numbers or location. The agency employs various strategies to recover the debt, including calling the defaulter’s personal, home and work phones, even showing up at their door several times. The company may go to the extent of calling family members, colleagues and friends to ensure they trace the borrower and get their full attention. If the debtor refuses to cover the overdue account, the collection agent may update the borrower’s credit report to reduce their credit score. However, if the borrower pays the debt, the collection agent will remit the funds recovered to the creditor after subtracting a specific amount as per the agreement.

Top Debt Collection Agencies in the U.S.

Debt collection agencies help small and medium-sized businesses recover debts that have passed their due date. Consumers and other debtors may refuse to cover their overdue accounts, prompting companies and other creditors to ask debt collectors to assist in recovering the money. However, the agencies, which are also known as debt collection companies, must adhere to the Fair Debt Collection Practices Act (FDCPA) when chasing borrowers. Debt collection agencies are not uncommon in the U.S., and if you own a small or medium-sized business, you’ve probably asked, or you’re planning to approach, a collection agent to help you recover money from defaulters. Here’s a short list of the best, and most popular, debt collectors in the United States.

Portfolio Recovery Associates (PRA), LLC

Headquartered in Norfolk, Virginia, PRA has been in the market for more than two decades, and provides options to consumers to pay off their debts. They ask about the personal financial plans of borrowers before determining the most appropriate payment plan.

Capital Collections

This publicly-traded debt collector uses top collection tools and software to track debtors. Once the borrower is found, the agent works with them to not only determine an appropriate plan to recover the debts, but to also improve their cash flow. The company was founded in 1996, and is based in Fresno, California.

Enhanced Recovery Company (ERC)

You’ve probably heard of this prolific debt buyer. ERC offers services in finance, retail, e-commerce, and insurance. They are experts in retrieving older and specialty accounts.

NCO Financial

This agent has assets that are valued upwards of $10 billion and is one of the most prolific debt collectors in the U.S. Headquartered in Horsham, Pennsylvania, the company is co-chaired by Tim Galloway and Jay King, who bring almost 40 years of debt collection experience to the company.