Collection agency is an organization that collects the payment of past-due bills. Many physicians, dentists, hospitals, stores, and manufacturers hire a collection agency instead of spending their own time trying to collect such debts. The agency receives a fee ranging from a fourth to half of the amount it collects. There are thousands of collection agencies in the United States.
A collection agency deals with a debtor chiefly through letters and telephone calls. At first, an agency may merely urge the payment of a bill so that the debtor’s credit rating does not suffer. Each successive letter or call is firmer in its demand for payment. If the debtor does not pay, the agency may take legal action. It may obtain a court order requiring the debtor’s employer to pay the agency part of the debtor’s wages. But in many cases, the agency tells the creditor (the person to whom the money is owed) the money cannot be collected. The creditor then decides what legal action to take, if any. Many states license collection agencies, but only a few regulate collecting practices.
