What Does Third-Party Collector Mean?
A third-party collector is an organizations that is mandated by creditors to collect debt from their debtors on their behalf on a regular basis. The purpose of third-party collectors is to collect the debt in full without having to resort to legal proceedings. They can collect on commercial or consumer debt and are paid based on the success of their collection efforts.
WorkplaceTesting Explains Third-Party Collector
Third-party collectors typically become involved in the collection of a debt once it has gone beyond delinquent status, that is, where the debtor has not made payment for more than 30 days. At this point the debt changes to charge-off status which means that the creditor has not received a payment for 6 months and has written off the debt as a loss. The creditor instructs the third-party collector to take action and they engage with the debtor to negotiate a repayment plan or to institute legal proceedings. The activities of the third-party collector are regulated by the Association of Credit and Collection Agencies and the Fair Debt Collection Practices Act to prevent unfair debt collection activities.