 TITLE: What Is a Collection Agency? CONTENT: How Does a Collection Agency Work?\n----------------------------------\nCollection agencies may be brought in when a company has failed in its efforts to collect an outstanding debt. If a creditor has sent your debt to collections, they expect to receive only a portion of any money collected. For them, this is preferable to receiving nothing at all—or continuing the process of trying to collect your debt themselves.\nYou may encounter one of two types of third-party debt collectors:\n*   **Agencies that collect debt on a creditor's behalf**: These agencies pursue payment in exchange for a percentage of the money they collect—typically 25% to 50%.\n*   **Debt buyers that purchase debt from the lender**: A creditor may believe that the likelihood of collecting your debt is so remote that they sell your debt for pennies on the dollar.\nDebt collectors only make money when they collect on your debt. They are single-minded, persistent and highly motivated. If a collection agency contacts you, don't assume you can ignore them and hope they go away. Instead, manage your relationship with them proactively and remember that you have specific rights when dealing with them. END