How Collection Companies work
I hope this isn’t the case, but maybe you’ve had the unfortunate experience of dealing with one or more collection companies. It’s awful to be on the receiving end of their attention, but it’s important to know how they operate so you can handle them effectively when and if necessary to resolve your credit issues.
Collection agencies are third-party companies that buy thousands and thousands of people’s debt every single day. What this means is that they are paying for basic information on the borrowers of delinquent accounts. By buying bad debt (which is very cheap), they’re betting their money on the handful of those accounts that will actually end up getting paid.
Debt collection companies acquire basic information because it lessens their up-front costs and, ultimately, their risk. It would be very expensive for them to buy additional data like the detailed billing history, signed contract, and original documentation for every account they tried to collect. So they don’t.
Debt collectors will say anything and everything to get you to pay them, now. They’ll pursue you relentlessly, argue with you, try to confuse you. They won’t bat an eye at intimidating you, threatening you, and telling you all kinds of lies to make you give in. But regardless of what they might tell you to the contrary, here’s the bare-bones information they actually have on you: your name, your address, your phone number, who you owe money to, and how much you owe. That’s it — and those few details may not even be accurate! Besides it is more costly for them, collection companies don’t bother acquiring the appropriate documentation for the debts they buy because they don’t think it matters; they know people rarely ask to validate their debts. It’s true. Some debts agencies try to collect may not belong to the person they’re chasing. A certain percentage of the people who end up paying the debt collectors in order to stop the harassment may be doing so unnecessarily because they failed to verify that the debt was even legitimate.