Collection agencies play a vital role in recovering the money or profits of the businesses. The core responsibility of the collection agency is to collect or recover the debt. Collection agencies acts as an agent of the creditors and collect the debts from the debtors and take percentage from the total amount recovered. Percentage has been decided prior between them. Lenders and creditors hire collection agencies to recover their rightful dues from the debtors who haven’t been paying to them. Usually, lender hire the collection agency when they failed to recover the money from the debtor and lender has tried almost every method to recover the money but debtor isn’t reverting back the rightful amount of lender. This is the time when lender involves a third party that is called collection agency.
Most of the companies outsource the collections to different agencies but some companies have their own recovery department who are handling the all receivable issues and those companies run them internally like the serving court documents. Creditor has the right to report this issue in credit bureau to recover their amount as soon as possible. Moreover, if borrower isn’t returning the money in given time frame then it would definitely ruin the credit history of the borrower and companies or banks would never issue the loan to that company or individual. Further, companies involve the collection agencies to recover their money with the time 3 or 6 months and collection agency is obliged to meet the deadline and recover the money within given time constraints. Collection agencies take the headache of the lenders and recover the money within committed time. We must say collection agencies have make the life of the lenders easier. This is one of the most challenging job to recover the money from anyone.
When borrower doesn’t return the liable amount:
The core priority of the collection agency is to recover the receivable in any case but if borrower is facing severe financial crises then collection agency updates the credit report borrower with the status of collection that eventually tarnish the credit history of the borrower and borrower may not be able to obtain the loan in future. This act will impact the credit history of the borrower for minimum 7 years. Moreover, collection agencies representative tries different methods to influence to borrower to pay off the liable amount such as by calling on the landline or office numbers on frequent basis, contact the family members and friends of the borrower to influence the borrower to return the money and by making the surprise appearances at door of the borrower.