Debt Collector

When borrowers fall behind on payments, creditors may hand the account to a collection agency, which works for a fee or a share of what it recovers, or sell the debt to a debt buyer for a fraction of its value. The debt buyer then tries to collect the full amount.

Debt collectors contact debtors by letter, phone, email or text to request payment or arrange repayment plans. If these efforts fail, they may take legal action, depending on the country and the size of the debt.

For example, an unpaid phone bill of 300 might be passed to a collection agency, which contacts the customer and offers a payment plan.

Many countries regulate debt collection to protect consumers from harassment and unfair practices. In the United States, the Fair Debt Collection Practices Act limits when and how collectors can contact people and requires them to verify debts if asked. In the United Kingdom, collectors are regulated by the Financial Conduct Authority. Consumers have the right to ask for proof of a debt and to dispute errors, and free debt advice services can help.