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A bill collector is the person who recovers defaults or late payments from a second party, i.e. the subject of debt; and on behalf of a first party, i.e. the original creditor. Such recovery agents track and contact the debtors in order to inform them of a past-due debt. They target to collect the full debt amount, using lawful and ethical pre-legal and legal methods and tools. Bill collectors process their actions and authorities under different acts and regulations, e.g. the FDCPA (Fair Debt Collection Practices Act for USA, ext. link 2). Due to the restrictions of FDCPA a debt collector is NOT considered as such, when he acts under the creditor’s company name and is part of creditor’s organisation. In such case the debt collector is not covered by FDCPA’s policy and laws. A bill collector is usually a part of an authorised debt collection agency, but can also be a private juridical person.
Jurisdictions of a bill collector
The actions of a bill collector vary and depend on the country in which he operates. The same actions are strictly regulated by different laws, acts and international organisations, such as FDCPA + Department of Financial Services in New York for USA, the FCA and OFT in UK and many others.
The legal authorities of a debt collector may vary as following:
- If the recovery agent is a standard bill collector, he is authorised to track the debtor and then use multichannel communication in order to collect the outstanding debt amount. He can send the subject of debt reminders in the form of emails, letters by post;
- They can contact the debtor by phone, leave voice messages, contact via Skype, etc.
- The standard bill collector can also send the debtor official letters of demand on behalf of the original creditor. Such letters contain: name of the collection agency, name and company of the original creditor, total amount due and a deadline for payment.
All these are widely known as pre-legal methods of collection. If they turn out to be unsuccessful, the bill collector has the right to transfer the case to court, from where legal actions will start. From that moment onwards, the bill collector will not communicate further with the subject of debt; the debtor is to be contacted only by legal representatives of court and law. They will receive a formal court letter explaining the debt amount, payment methods, subject to pay to and deadline date for settling the full amount due. This is the so-called CCJ (Country Court Judgment), which means the court has officially decided that the debtor owes a specific sum to a first party (the creditor);
If the bill collector is an enforcement agent, he has the legal right to visit debtor’s property and can offer three options to the subject of debt:
- The debtor can recover the full default amount, if he has the funds to do so;
- The enforcement agent can offer a conductive payment plan, if the subject of debt is not in the financial state to cover the whole debt sum;
- The agent can offer the debtor to collect part of their belongings and sell them by auction in order to recover the amount of the debt (if the subject of debt again cannot afford to pay the volume of debt). However, the enforcement agent can do so only with debtor’s consent, he cannot perform such actions forcefully;
- If the bill collector is a bailiff (a law enforcement officer), he possesses the legal authority to visit the debtor in their property and forcefully confiscate part of their belongings to restore the debt sum in full. However, this is a rare situation. Although the bailiff has the right to process the actions above, he usually tries to negotiate a convenient payment plan for the subject of debt;
Depending on the country of operation, and on the collection agency’s policy & terms and conditions, the debt collector can demand a commission fee either from the first party (creditor) or the second party (debtor). In some countries DCAs (Debt Collection Agency) has the legal right to charge the debtor an interest. In other countries the recovery agent can request payment of their commission percentage from the subject of debt, only if it is specified in the contract signed between the creditor and the debtor.
Types of debts recovered by a bill collector
Generally debts are divided into secured and unsecured debts. The first have collateral consequences (also known as “instalment” debts), where the creditor has the legal right to confiscate the asset, if the second party falls into debt, e.g. a home mortgage. The second type of debts (also known as “revolving” debts) do not have such collateral, e.g. credit card debts, medical debts, student loans, different club fees, telephone bills, and others, i.e. all loans that are extended without the requirement of a collateral. A bill collector usually recovers unsecured debts, as they always have been more problematic and difficult to collect. He also deals with consumer and corporate debts, which can be divided into: purchase debts (different goods or online services), cash withdrawal and cash flow based debts, lease debts (rent debts), trade debts, healthcare debts, education debts (deriving from student loans), etc.
Used literature & external links