Debt Collection & Accounting

Debt collection is the procedure of following up payments of monies owed by people or organizations to third parties. An agency which deals in debt collection is called a debt collection company or collection agency. When debt collection began debt collection agencies were established to follow up on payments made by consumers who could not afford their monthly payments. As time went on the practices of debt collection agencies changed so that they could collect debts from individuals who could not afford their monthly payments and also from organizations that could not be easily followed up with. It was not uncommon for debt collectors to harass consumers into paying off their debts with threats of reporting them to collection agencies if the consumer did not pay according to the debt collection agreement.

Debt Collection Agencies have rights that you do not have. The Fair Debt Collection Practices Act protects the rights of consumers to dispute debt collection practices by contacting an attorney who is registered with the National Association of Attorneys General, contacting a consumer credit counseling service, contacting the consumer reporting agency, or contacting any other agency specified by the law. The Federal Trade Commission has outlined a number of rules that both consumers and debt collectors must abide by when dealing with each other. These rules can be found on the Commission’s website.

An individual who does not follow through with their agreement to pay or ignore a debt can be pursued by a collection agency. Depending on the type of debt collection agreement entered into between the debt collector and the person being contacted there are various ways that the collection agent can pursue the individual. They can use debt collectors or court representatives to personally contact the individual to remind the individual of the agreement or order the individual to make a payment in full. Failure to make payment may result in court action against the collector.

If you are concerned about mounting debts talk to your accountant to see how you can budget your may out of debt.