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What Is a Collection Agency?

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What is a collection agency?

If you’ve been contacted by a collection agency, you may be wondering, “what is a collection agency?” Not everyone knows the answer, especially if they’ve always paid off debts on time. When you’re delinquent on a debt (at least 60 days past due), a collection agency may begin to contact you to collect. This can happen with credit cards, medical bills, mortgages, and personal and auto loans. You might even hear from a collector for outstanding utility and cell phone bills.


How do collection agencies work?

How collection agencies work can vary. In some instances, they may act as middlemen on behalf of the creditor to collect your debt. In others, they might purchase your debt from the creditor at a discount. This can happen when the creditor has decided it’s unlikely to collect payment and chooses to cut its losses by selling your debt to a collection agency or other debt buyer. Typically, creditors package up similar debts, for instance bundling debts that are old and unlikely to pay separately from newer debts that have better odds of paying. Collection agencies can then purchase these debts. If and when you ultimately pay, the agency keeps the amount collected.


What can I expect from a collection agency?

A collection agency may send you letters and call you repeatedly to try to get you to pay off your debt. Some frequent ways debt collectors may contact you are by phone, letter, email or text message. It is important to note that a debt collector should not contact you at inconvenient times of the day or night, such as before 8 in the morning or after 9 at night, unless you agree to it. Additionally, debt collectors should not contact you at inconvenient places, such as your work, provided that the debt collectors are told that you’re not allowed to receive calls at work. Within five days after the debt collection agency first makes contact, you should receive a written validation notice telling you how much money you owe, the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.


Do debt collectors have any restrictions?

If you’re being contacted by a collection agency, you may want to look out for some of these general off limit practices:

  • Harass or threaten you;
  • Use obscene or profane language when speaking to you;
  • Provide false credit information about you to anyone, including a credit reporting company;
  • Publish your name in a list of people who refuse to pay their debts;
  • Mislead you with false statements, such as that you have committed a crime or owe more than you do in reality; and
  • Try to collect any interest, fee, or other charge on top of the amount you owe unless state law or the contract that created your debt allows the charge.

If you do not believe that you owe the money the debt collector is contacting you about, you may send the debt collector a letter stating that you do not owe any or all of the money.  If you are uncertain as to whether you owe the debt, you may send the debt collector a letter asking for verification of the debt.   


How do I work with a collection agency?

There are a few general rules of thumb to keep in mind when navigating how to work with a collection agency:


Be Proactive

Even if you are unable to repay the debt immediately or believe that you do not owe the debt, you may want to talk to the debt collector initially to try to come to a resolution. Matters may worsen over time if left unresolved, so work directly or with an attorney to try to come to a resolution with the debt collector.


Keep It Short and Simple

When first contacted by a collection agency, it’s best to keep things as short as possible. Request the information in writing (within five days of contacting you, a collector must send you written notice detailing the amount owed, the creditor’s name, and how to dispute if applicable) and end the conversation.


Keep Records

Beyond disputes, it’s important to document any communication related to debt collection. This may include:

  • Keeping copies of all written correspondence to and from the collector;
  • Documenting all phone calls in notes, including date, time, and a summary of the conversation; and
  • Saving voicemails from collectors.





Disclaimer: The information posted to this blog was accurate at the time it was initially published. We do not guarantee the accuracy or completeness of the information provided. The information contained in the TransUnion blog is provided for educational purposes only and does not constitute legal or financial advice. You should consult your own attorney or financial adviser regarding your particular situation. For complete details of any product mentioned, visit This site is governed by the TransUnion Interactive privacy policy located here.

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