Collection agents act as liaisons between businesses and customers to collect debts and resolve outstanding balances. Their responsibilities include developing payment plans, locating debtors in order to begin the recovery process, and negotiating debt payments. They may also be required to negotiate payment settlements on recoverable debt.

How Does a Collection Agency Work?

Collection 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. You may encounter one of two types of third-party debt collectors: 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%. 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.