Everybody takes loans and a fair number do not return them back.
To avoid paying back the loan, some debtors may change their residence or simply not pay for a variety of reasons.
Sometimes these reasons are beyond the control of the debtor like a sickness or a job loss because of recession.
For these people the creditors hire what is known as a bill collection agency, which in reality, is a debt collection company that specializes in recovering outstanding debt from the debtors.
However, the job of a debt collection agency involves dealing with the delinquent in a professional manner and within the ambit of the law.
In the United States there are regulatory laws that cannot be contravened.
These laws enacted by federal and state are inviolable and the rights of the debtors is clearly spelt out.
All debtors must be aware of these laws.
In the present economic scenario in the USA with a slump in the housing market and all round recession the chances of a consumer experiencing monetary problems is quite high and this translates to greater delinquencies.
Thus some of the debtors are unable to pay back.
But all financial pundits agree that even in a volatile and recession market a creditor is entitled to get his money back.
This is where the debt collection agencies come in.
A debt or bill collection agency works on behalf of the creditors.
This may be for a fixed fee or a percentage of the recoveries.
These percentages are not fixed, but are variable and could range from 3% to 50%.
In addition most debt collection companies will charge a fixed fee to cover administrative expenses.
This is to be paid upfront before the debt collection agency starts its work.
Once the contract is signed between the creditor and the debt collection agency and the administrative fees paid the agency will start its work.
It will contact the debtor within the ambit of the law.
It must be clearly understood that the law expressly prohibits threats or intimidation on the part of the debt collector.
In case this happens the debtor is within his right to report to the federal or state authorities, who will take action against the collection agency.
The Fair Debt Collection Practices Act (FDCPA) is the watch dog as far as recovery of debt is concerned.
This was enacted by the Federal Government in 1977 for the entire United Sates and is a federal law.
It is a comprehensive law and covers the rights of the debtor in detail.
Debtors must be made aware that the FDCPA expressly debars a collection agency from contacting a debtor by making threats of imprisonment or causing bodily harm.
In addition the collection agents are debarred from calling at odd hours or in the middle of the night.
There are other prohibitions as well and that includes publicizing the name and amount by the debtor.
There can be no publicity of this.
The collector is also debarred from trying to get confidential information from employers and relatives except with information to find the new telephone number or address.
Debt collection agencies can also send a registered a letter to the last known address and pursue the matter further.
Debt collection is a vast and lucrative field and more and more companies are entering this field.
In fact in the USA it is good business to start a debt collection agency and try and reap in the profit.
But debt collection agencies should be aware that consumer laws in the USA are strict and no harassment will be tolerated.