What are Debt Collectors and Collection Agencies?

Milad Hassibi May 8, 2018


Being in debt is not a situation anybody wants to be in. If you are in significant debt, whether it may be medical debt, credit card debt, etc., you might be receiving constant phone calls from people demanding payment for bills you can’t afford to pay.

Collection agencies and debt collectors have been around as long as people have been borrowing money: since man first started using money. Being harassed by debt collectors can add a lot of unneeded stress to your current situation, but is there anything you can do about it?

Who are these people and how do they work? Can you stop the phone calls? In this article, we will explain all of that.

What are collection agencies and debt collectors?

Collection agencies are companies that get hired by your lender to try and get you to repay yourA woman is yelling at the phone to her debt collector debts. Debt collectors are the people that work in collection agencies and are the ones responsible for calling consumers to pay their debts off.

Besides phone calls, some collection agencies will send a letter and in some cases file lawsuits to get you to pay.

Although there are businesses who only operate as collection agencies, most lenders, and large banks will have their own internal collections department.

Before your lender sends your debt off to a collection agency, they will most likely use their own internal department to try and collect payment for the first 180 days.

Can I stop the phone calls?

Yes, you can. As a consumer, you have the right to request that the collection agency stop calling you. However, you cannot simply ask them to do this over the phone, as you must submit a request in writing to your debt collector/collection agency. Be sure to keep an extra copy of the letter for yourself and possibly your attorney.

After you submit your letter, the agency can only contact you to let you know that they will not be pursuing you for your debts or that they are taking you to court.

Can collection agencies hurt my credit?

Collection agencies themselves have no impact on your credit score. However, having 5 missed payments on your electricity bill might do so. Your credit report will also show that you have been sent to collections, which doesn’t look good for new credit applications. Many times, collection agencies will “sell your debts” to another collection agency that will try and pursue you for the money owed.

This will also show up as multiple collections on your credit reports even though it is for the same debt. Be sure to dispute these errors with the 3 major credit bureaus.

Final Note

All in all, being in debt is stressful enough and adding collection agencies to the mix will only add to the stress. If you are being contacted by a collections agency, be sure to send them a cease and desist letter as mentioned in the second point of this article. Ignoring the problem won’t make it go away, as it will actually make it much worse.

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