Although they sound quite intimidating, debt collection agencies are a normal stage of the debt collection process, and chances are all your debts will end up with one at some point.
If you've been contacted by a debt collection agency we can give you free debt advice to help you get back in control of your situation.
What is a debt collection agency?
A debt collection agency is a company that specialises in dealing with accounts that are in long term arrears (where payments haven’t been made or the person is making a reduced payment).
Debt collection agencies will work in one of two ways:
- The original company sells your debt to a collection agency because they don’t want to continue dealing with your account. They sell this debt for less than the amount you actually owe and then the debt collection agency will collect the full amount back from you. This is how they make their money. Or,
- Your debt is still owned by the original creditor but they get a debt collection agency to collect the money back from you and in return the collection agency keep a percentage of the money they collect.
You can usually tell which of these applies by checking where the letters tell you to send payments. If they ask you to pay the debt collection agency, the debt has been sold. If they ask you to pay the original creditor, they still own the debt.