Are there different types of debt collectors?
Yes. There are many types of companies that will contact you to collect a debt. Depending on type of company that contacts you, depends on how you should respond and under what laws you can respond with.
Many companies will attempt to collect the debt internally before sending it out to a Third Party debt collector or selling the account to a Debt Buyer. Even if they outsource the debt to a collector they are acting in the companies name. They may not be held to the Fair Debt Collection Practices Act (FDCPA) but that does not mean you have no rights.
A debt buyer is a company that purchases bad debt from another company. Debt Buyers purchase the debt for pennies on the dollar in hopes that they can eventually collect more than what they paid and make a profit. Not only do they often report to the credit report they may file lawsuits to collect the debt.
Third Party Debt Collector
Third party debt collectors are often called collection agencies. They do not purchase a debt but rather collect on the amount owed for the owner of the debt. They earn a percentage of whatever they collect for the owner of the debt. Third party debt collectors are beholden to the Fair Debt Collection Practices Act (FDCPA) across the United States. Some states have enacted specific laws against third party debt collectors.
Attorney Debt Collectors
Attorney debt collectors are third party debt collectors. They often file lawsuits against consumers. They need to be licensed and bonded in the state the consumer resides in just like any other third party debt collector.
Things to remember about people that contact you concerning a debt:
- You have rights that protect you against abusive debt collection.
- They have the right to try to collect a debt they believe to be owed.
- They may have the right to file a lawsuit against you
Just because a debt is on your credit report does not mean you owe it.