Everything You Need to Know about Debt Collection in 2021

The debt collection industry is quite notorious. No one wants to deal with persistent callers asking about an overdue debt that they would have sooner preferred to forget. But, whether you want to be reminded or not, if you have a debt with an outstanding balance or if you’ve seriously fallen behind on your payment installments, you should probably expect to be dealing with a collection call from a debt collection agency soon. After all, not only is it far cheaper to hire agencies like Fidelity Creditor Service to collect a debt, more than one of all four consumers (at least 28%), have at least one debt in collections. Learn more below about debt collection and how the whole system operates for the next time you ever have to deal with a collection call:

Table of Content:

    • Why is a Debt Collector Contacting You?
    • How Does Debt Collection Affect Your Credit?
    • What Should You Expect from a Collection Agency?
    • How to Deal with Debt Buyers?
    • How to Tell If You Are Being Scammed by a Debt Collector?
    • How to Protect Yourself from Debt Collection Scams?


The term Debt Collection is quite literal. It describes the process of pursuing and collecting the debts owed by individuals or businesses. Debt collection can be performed by the original creditor, of course. But, in cases where debtors are being particularly uncooperative, third-party agents or agencies, called Debt Collectors, who are in the business of collecting debts, may take on the task in exchange for a commission based on the amount recovered. Below, we’ve answered some of the more commonly asked questions about debt collectors to introduce some of the more basic concepts of the debt collection process:

Why is a Debt Collector Contacting You?

There are several reasons why a debt collector may be contacting you:

  1. The main reason being that your creditor believes that you are past due on a debt. At which point, they’ve either assigned your case to one of their own in-house debt collectors or a third-party debt collector agent or agency who can work on their behalf.
  2. Not all calls from a debt collector are collection calls. You may receive a phone call from a debt collector because you know of someone who owes a debt. Although, in such a case, they are not allowed to reveal what they’re calling for.
  3. You may also receive calls from a debt buyer looking to collect on a debt that they’ve purchased from the original creditor. Debt buyers, as suggested by the name, are third-party debt collectors that are in the business of buying debts (often by pennies on the dollar), in order to collect said debts in full.

How Does Debt Collection Affect Your Credit?

If your account has been sent to ‘collections’ then it can have quite an adverse effect on your credit score when reported. This usually only shows up when your debt has become seriously delinquent (or severely overdue.) Such a mark on your credit report can last up to seven years. And, despite what you might expect, even if it may improve your credit score somewhat, such a mark may remain even if you pay said debt, significantly increasing your chances of being denied for credit cards and loans.


As a debtor, what should you expect when your debt has been transferred over to a debt collection agency like Fidelity Creditor Service? Well, first things first, as stated here by the Manager of Fidelity Creditor Service, Gary Davis, you should be aware that, “Regardless of the current economic conditions – the role of a collection agency is to safeguard the rights of the creditors.” That means that they are always working with the interest of the creditor in mind. Although, this does not mean that there are no protections in place for you as the debtor (more on this below.)

What Should You Expect from a Collection Agency?

When dealing with a debt collection agency, there are certain constants that you can expect:

  • They may send you letters and call you repeatedly throughout the day or week through various channels (email, phone, SMS, letters, etc.) Although, it is important to note that the frequency of these calls is restricted by the Fair Debt Collection Practices Act (FDCPA). They also cannot call you before 8AM or after 9PM in your local time zone.  
  • It is within your rights to request personally identifying information on the debt collector and the agency to ensure their credibility. 
  • If you are working with a reputable agency, they will give you a timeframe (30 days) from the date of their collection letter, during which you can dispute the debt in writing. If you do not turn in a letter of dispute, the debt can be presumed to be valid.  
  • Reputable agencies also act with a certain degree of decorum. They will not resort to harassment or threats as this is, again, restricted by the FDCPA. In fact, most collection agencies are quite proud of their professional conduct.  Gary Davis, a manager at Fidelity Creditor Service, says “We always treat debtors with respect.  There is no value to be gained in mistreating debtors.”


This was mentioned previously, but in some cases—usually when the original creditor has grown tired of collecting the debt themselves—your debt may be purchased by a third-party debt buyer, often for pennies on the dollar. (Paying on average 4 cents per $1 owed, to be exact.) Usually, debtors are notified that their debt has been purchased both through email and official letters. Such a change should also show up in your credit report as a “charged off” debt. Debt buyers take on a variety of debt. Some worth more than others (like mortgage debts), and some worth less (like utility debts.) And, because they own the legal rights to the debt, they get to keep every single dollar that they are able to retrieve from the debtor — unlike debt collectors like Fidelity Creditor Service, who work in the interest of Creditors and usually get paid only a specified commission based on the amount recovered. Most importantly though, because debt buyers buy debt in bulk sales from original creditors at incredibly discounted rates, you are more likely to get a better settlement deal when working with them.

How to Deal with Debt Buyers?

Despite technically being limited by the same laws as regular debt collection agencies, Debt Buyers may operate differently because they are working on their own interests. This means that how you deal with them will be different from dealing with regular debt collectors. Here’s what you should remember when dealing with debt buyers:

  • The debt buyer purchased your debt at a discounted price (the older the debt, the cheaper it often is). Because of this, Debt Buyers are known to offer better settlements.
  • Beware of signing payment agreements with debt buyers. Once you’ve entered into a payment agreement with a debt buyer, it is in your best interest to honor that agreement, as it will give the debt buyer more leverage when it comes to taking legal action. It can also further damage your credit score.

Fortunately, these facts mean that you often have more leverage when dealing with debt buyers than when you are dealing with your average debt collection agency. 


As a debtor, there are certain things that you should know about the debt collection process. Not only to safeguard your own rights but also to significantly increase your chances of making it through the process without too many grievances.

How to Tell If You Are Being Scammed by a Debt Collector?

Most calls are performed to protect the interest of the owner of the debt (whether it be the original creditor or an independent party that has purchased the legal rights to it) by persuading you to honor your responsibility. And to do this legally, they must do so in accordance with the Fair Debt Collection Practices Act (FDCPA) — which dictates the practice of debt collection to safeguard the rights of both debtors and creditors. If you are being contacted by a debt collector, whether it be an independent party or a collection agency, here are some key red flags to keep an eye on:

  • Threatening or harassing comments
  • Foul, obscene, and otherwise insulting language
  • Threats involving jail time
  • Hiding identifying information about their agency
  • Inaccurate information about the details of a debt
  • Revealing your debt to friends, family, or peers

If you have any reason to believe that the person on the other side of the phone is not a legitimate debt collector, or that they’re trying to trick you into paying a debt that you do not owe (even if it’s because of additional interest fees or other charges, on top of what was agreed in your original contract), then you may send them a letter asking them to formally stop contacting you. However, keep in mind that doing this will not necessarily stop the debt collector from suing you or reporting your debt to a credit reporting company if that debt is one that you rightfully owe.

How to Protect Yourself from Debt Collection Scams?

To add to the previous section, we’ve also compiled a list of things that you can do if you are targeted by a fake collection agency or debt buyer:  

  1. Ask Questions: As the debtor, you have the privilege of being able to access information about the debt. Do so and be vigilant when it comes to proving its authenticity. And, if the credibility of the debt collector comes into question, be just as vigilant when it comes to ensuring that they are legitimate.
  2. Take Notes: Make sure that you have a record of all of your conversations and transactions. This will be helpful further down the road, whether or not the debt collector ends up being legitimate.
  3. Get into Contact with Your Attorney General’s Office: Not only will they be able to verify the legitimacy of the debt collector’s agency. But they are also always on the lookout for any potential debt scammers and would appreciate the tip-off!
  4. Submit Complaints to the FTC and the CFPB: Filing a complaint to the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) will also be a great way of ensuring that these fake agencies are taken down. Just be very careful not to file a false complaint as it can subject you to civil litigation.  Complaints with governing bodies are taken seriously.  If you have a legitimate debt and you think filing a false complaint will create leverage for yourself, you may end up being sued for defamation by the collection agency.


The business of debt collection is quite the tricky one. But, by keeping yourself informed you’re already well on your way to making sure that you are protected from ever being taken advantage of by it! Thankfully, it is a highly moderated industry with very specific laws and restrictions. So, even if you are new to the game, you needn’t be so anxious about not knowing what to do.

The post Everything You Need to Know about Debt Collection in 2021 appeared first on Tekrati.


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