A collection agency is a business that specializes in collecting payments on debts. Many collection agencies merely service routine payments on loans, receiving mail, processing checks, and otherwise servicing debt accounts. Other collection agencies specialize in aggressively collecting payments on past-due accounts or defaulted loans. In some cases, collection agencies purchase defaulted debts from other businesses, usually at a fraction of the value of the debt, and pursue the debtor very aggressively-in this case, the original business would write off the debt as a loss and the collection agency is legally entitled to collect the full value of the debt.
Collection agencies are governed by many federal and state laws, but many of them are very adept at adhering to the letter of the law while aggressively pursuing debt collection activities. Activities pursued typically include constant and strident telephone calls to the home, work, and any other place known to be frequented by the debtor. In some cases, collection agencies will place calls to neighbors or family members, though this practice may possibly be illegal. If telephone calls do not work, mailings and even personal visits may be used. Finally, lawsuits may be filed. In any event, negative reports will be filed on the debtor’s credit history. Sometimes, a collection agency’s goal simply is to make debt repayment preferable to constant hazing. The Federal Trade Commission regulates the activities of debt collection agencies.