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Collection Agency
A financial business that exists for the sole purpose of debt collection from individuals and from businesses is referred to as a collection agency. Such entities will typically be hired by a creditor to seek recompense of a bad debt or one that is said to be in "default." The creditor in question could be an individual, a bank, a lending agency, or a credit card company.
Some collection agencies do business by actually "buying" bad debts from creditors and pursuing collection of same on their own. This procedure allows the creditor to clear the bad debt from their accounts receivable and to write off a loss on the account in default.
In general perception, collection agencies have an historically bad reputation for harassment, threats, and heavy handed behavior toward debtors. Under the provisions of the Fair Debt Collections Practices Act, however, such tactics are now illegal under federal law.
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