What Does the 3rd Party Debt Collection Agency Do?

If you are wondering what does the 3rd party debt collection agency do? Then the foremost thought that arrives in your mind that they collect debts. But if you elaborate a little, you will know that they starts the very first bunch of your debts. This is where they started getting it wrong.

It is not their fault. A common refrain in recent press release of 3rd party debt collection agency is that they debt collection agency is making the calls or doing so on their own behalf. It started to creep into the coverage of the debt collection industry about five years ago around the time that the press discovered. There was a whole industry of debt buyers.

What’s the role of 3rd party debt collection agency?

The majority of collection agencies in US work on contingency. This means that they are paid when they collect a specific amount owned by another company and the most of the companies are banks. There are major other business types that are served by debt collectors including auto lenders, hospitals, government, small businesses and every sector of every industry.

Understanding Business models

Many of the people misunderstand 3rd party debt collection agency as financial firms. But their core services are for B2B businesses. When a default consumer credit card account is placed and once the work is completed and they are paid. Accounting in collection agencies is pretty straight forward. On the other note, the debt buyers are having a business model that connects with their names. And the debt purchases are financial firms witch accounting practices which are more similar to large consumers like banks and other collecting agencies.

Collection agencies and debt buyers are in fact linked to each other. Many debt buyers forward their accounts to collection agencies to work on a contingency basis. Also, they do basically the same thing for credit originators (return value of non-performing credit accounts). They just go about it in a different way.

Conclusion

So next time whenever you came across any 3rd party debt collection agency, make sure that their primary business is to collect debt and not to purchase debt. The companies really don’t try to hide the fact.