Welcome back to debt collection 101, your beginners guide to debt collection. In article two of this series, I wrote about what a debt collector will do after they have located their debtor and informed them of their debt. Oftentimes debt collectors can make it easier for debtors to pay back their delinquent accounts, can be friendly and offer advice, but also have the authority to mark your credit score negatively, and hand your account over to an attorney if you refuse to pay.

In article one, I wrote about the two different types of debt collectors, in house collectors, and third party collectors. In house collectors are bill collectors that work directly under the creditor, and these creditors are generally financially based businesses like mortgage or credit card companies. Third party collection agents make up the majority of debt collectors and work directly for a third party collection agency that is hired by a creditor to collect on their delinquent accounts.

Due to the fact that in house collectors work directly for their creditors, they are not restricted by a number of the rules and provisions of the Fair Debt Collection Practices Act (FDCPA). However, third party debt collectors are, and there are a number of rules and regulations that they are bound by.

In addition to the Federal regulations third party debt collectors must follow, they must also be careful to abide by the state procedures that apply as well. Debt collection is closely monitored because of the fact that people’s financial issues have the capacity to be a sensitive issue. According to the Federal Trade Commission, a collector must positively verify that they are speaking with the debtor themselves, and not anyone else before they can proceed.

After they have positively verified that they are speaking with the debtor, the collection agent will issue a statement, known as a “mini-Miranda” which tells the consumer that this phone call is an attempt to collect debt, and any information in the conversation can be used to do so. The numbers of rules and regulations for a collector who is calling cross country can be overwhelming. A number of companies use electronic systems now to help debt collectors keep track of all of the rules regarding each call. To be continued in parts 4, 5, and 6.

Mallory Megan works for Rapid Recovery Solution and writes articles about commercial collection agencies.

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