Is Debt Collection a Mean and Heartless Business

Businesses engaged ordinary commerce often sell goods and services on credit and must handle accounts receivable. Those businesses extending credit must make crucial decisions on what to do with over–due accounts. Collection agencies provide necessary services by collecting delinquent accounts, thus lowering costs that would otherwise be passed on to consumers.

DEBT COLLECTION SERVICES ARE OFTEN MISUNDERSTOOD, and the purpose of this article is to clarify some of those misconceptions.

Many People Believe: All collections agencies are heartless, mean-spirited trolls.
Generally speaking, best business practices dictates: In-house debt collectors are often credit granters, while third-party debt collectors are licensed collection agencies. Also, the FDCPA, a federal law regulating collections, applies directly to all third-party debt collectors, but only under certain circumstances does it apply to in-house debt collectors.

Many Individuals Believe: Collections Agency constantly hassle and harass individuals who do not have the means to pay their outstanding debt.
Generally speaking, best business practices dictates: One of the first lessons a debt collector learns is that harassment of a consumer is both ineffective and illegal under the Fair Debt Collection Practices Act (FDCPA). Instead, debt collectors are trained to listen to what consumers say and determine if they actually have the resources to pay the past-due bill.

Many People Believe: All collections agencies are heartless, mean-spirited trolls.
Generally speaking, best business practices dictates: In-house debt collectors are often credit grantors, while third-party debt collectors are licensed collection agencies. Also, the FDCPA, a federal law regulating collections, applies directly to all third-party debt collectors, but only under certain circumstances does it apply to in-house debt collectors.

Many Individuals Believe: Collections Agency constantly hassle and harass individuals who do not have the means to pay their outstanding debt.
Generally speaking, best business practices dictates: One of the first lessons a debt collector learns is that harassment of a consumer is both ineffective and illegal under the Fair Debt Collection Practices Act (FDCPA). Instead, debt collectors are trained to listen to what consumers say and determine if they actually have the resources to pay the past-due bill.

Many People Believe:  The best strategy to collecting debt is to be hard-nosed, rude, and lack empathy.
Generally speaking, best business practices dictates: The most effective collection agents are usually focused on collected debts from clients in a sophisticated, professional manner. Using “bullying” tactics with any client (or person, for that matter) usually results in an unsatisfactory result. A talented debt collection is able to find solutions to problems that are amenable to both the debtor and the creditor.


Many People Believe: Debt collectors send many individuals into bankruptcy.
Generally speaking, best business practices dictates: In reality, it would not make sense for a debt collector to encourage a consumer to file for bankruptcy. When people file for bankruptcy, their financial obligations to their creditors are usually wiped clean—and the credit grantor and debt collector receive very little or nothing. Debt collectors understand that people in financial trouble often need guidance in settling their accounts without expensive litigation, and often need the flexibility of alternative payment arrangements to work out their financial trouble. A debt collector’s business is to collect, but in practice, collecting often includes counseling.

Many People Believe: A debt collector’s job is to rile up a consumer and make them angry.
Generally speaking, best business practices dictates: While there are certainly situations that result in a heated conversation between debt collection agents and debtors, this is not an optimal situation for any of the parties involved. Debt collectors are the first people to propose to consumers a problem-solving solution regarding their debt status. Furthermore, the efforts of debt collectors keep the prices of goods and services from rising. Remember, there is no such thing as an unpaid bill. Through higher prices, consumers who do pay their bills end up paying for those who don’t.

Many People Believe: A struggling economy is a real boon for the debt-collection business.
Generally speaking, best business practices dictates: Although more accounts are placed with professional collection agencies during a recession, those accounts are also less collectible. When people are unemployed and business is struggling, bills do not get paid.

Many People Believe: Collection agencies are constantly hassling poor and destitute individiuals

Generally speaking, best business practices dictates: It is no secret that debtors are a varied and diverse group of individuals. Many debtors are ordinary people who have hit a rough patch or are temporarily out of work. It is imperative that our collectors understand that life can be challenging and treat all debt with respect and courteously and that they do recognize certain categories of people who experience financial difficulties:

  • Debtors often do not understand the advantages of paying their bills.
  • People who have had a change in their lifestyle due to death, illness, job loss or some other unforeseen and unplanned circumstance.
  • Those who simply do not understand the complexities of buying on credit.
  • People who promised to pay through credit agreements, broke their promises and are looking for ways to avoid payment.
  • Credit criminals engaging in fraud.

Information taken from ACA International- the association for credit and collection professionals.

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