first thing a creditor should be aware of when working with
any Collection Agency or third party collector is potential
liability. The "Fair Debt Collection Practices Act"
or "FDCPA", was enacted to protect debtors from
abusive and/or unethical actions by third party collectors.
All Collection Agencies and Attorneys (those who practice
law primarily as collectors) are regulated by the "FDCPA".
Many Courts have ruled that Creditors are responsible
for the actions of the Collection Agencies that represent
them. Judgments have been issued against Creditors for the
"FDCPA" violations of their Collection Agencies.
We have made available a version of the "Fair
Debt Collection Practices Act". Be aware
that the law does change from time to time and this version
may or may not be the most current.
The next issue for Creditors to be aware of is results.
The results, or success if you prefer, of a Collection Agency
are directly related to a few key factors. These factors
are philosophy, experience of collection staff, technological
expertise and work ethic. By far, the most important of
these factors is collection philosophy.
The philosophy of any given Collection Agency will be
either "hard" or "soft" collections. At
first, you may think that "hard" collections would
be the most effective, but in our experience, that simply
is not the case. As the debt burden per household rises,
it becomes more necessary for collectors to be problem solvers,
not just hard core collectors. People with debt problems
too often face the decision of having to choose which creditor
will be paid each month. Pushing too hard may cause your
payments to go to another creditor, or even worse, people
may opt to file a petition for bankruptcy. In 1996, over
1 million bankruptcies were filed in U.S. Bankruptcy courts.
The next most important factor is the experience level
of the collection staff. A common problem in the collection
industry is employee turnover. At some agencies, it is difficult
for them to keep collectors long enough for the collectors
to become skilled at their jobs. Collecting is a skill. A
highly skilled collector can often collect two or three times
as much money as a "green" collector. It is not
uncommon for an agency to have a collection staff with an
average of less than one year of experience.
We pride ourselves on our ability to attract top level
collectors and keep them. Our staff, including data entry,
collectors, insurance clerks and legal clerks, have an average
of 4.5 year of experience. That is substantial in the collection
industry. Our management staff averages over a decade in
The American Collectors Association has several pages
on their web site with specific information for creditors:
* A general guide for all creditors
* Do you have a collections problem?
* How to select a collection agency!
* Credit grantors and the FDCPA
* ACA members code of ethics