Debt collection
In the 21st century in many countries, legislation regulates debt collectors, and limits harassment and practices deemed unfair.
Under Babylonian Law, strict guidelines governed the repayment of debts, including several basic debtor protections.
In occupied territories of the Roman Empire, tax collectors were frequently associated with extortion, greed, and abuse of power.
In medieval England, a catchpole, formerly a freelance tax collector, was a legal official, working for the bailiff, responsible for collecting debts, using often coercive methods.
[citation needed] During the Great Depression of the 1930s in the United States, large financial institutions relied heavily upon foreclosure to collect outstanding mortgage debts, which gained an overwhelmingly negative public perception.
Information about debts, late payments and default may be placed by a borrower's credit record, and usually remain for several years.
Debtors may fail to pay (default) for various reasons: because of a lack of financial planning or overcommitment on their part; due to an unforeseen eventuality such as the loss of a job or health problems; dispute or disagreement over the debt or what is being billed for; or dishonesty on the part of either the creditor or the debtor.
First-party agencies typically get involved earlier in the debt collection process and have a greater incentive to try to maintain a constructive customer relationship.
Given the time-sensitive nature of these assets, an advantage of this technique is that it gives the debt purchaser more control and flexibility to maximize collections.
The service sends a series of increasingly urgent letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and subsequent negative credit report.
Depending on the terms of the SLA, these accounts may revert to "hard collection" status at the agency's regular rates if the debtor does not respond.
[13] In the United States during the savings and loan crisis of the 1980s, there was a huge resurgence of foreclosures and written-off accounts, similar, although on a much smaller scale, to that of the Great Depression.
Some financial innovators decided that there may be some profit in buying up delinquent accounts and attempting to collect a small portion of the amount due.
They purchased these accounts from the original lenders at pennies on the dollar, and turned profit by collecting a fraction of what was owed by the debtor.
The law is typically called the Collection Agencies Act and usually affords a government ministry power to make regulations as needed.
[25] Pursuant to the UAE laws for financial debt collection, an extrinsic value asset needs to be shown to the creditor or the bank.
If the debtor does not provide an extrinsic asset or pay back the financial amount, he is accountable to the civil and criminal liabilities.
[citation needed] According to the UAE financial laws, it is stated under the Article 401 of the Penal Code that if the person provides a bounced cheque, he shall be fined for this criminal activity or given the punishment of imprisonment.
If that is true, then a case is filed in the police station against the defaulter, after which they will investigate the matter and referred to the Public Prosecutor office.
[citation needed] In the UK, debt collection agencies are licensed and regulated by the Financial Conduct Authority (FCA).
[26] The FCA sets guidelines on how debt collection agencies can operate and lists examples of unfair practices.
Likewise the creditor may move to inhibit, Attach or arrest in the hands of a third party with the assistance of an Officer of the Court.
The Bureau of Consumer Financial Protection, housed within the U.S. Federal Reserve, also has regulatory power over collection agencies.
The FDCPA allows aggrieved consumers to file private lawsuits against a collection agency that violates the Act.
Alternatively, the Federal Trade Commission or a state attorney general may take action against a noncompliant collection agency and, in the event a violation is found, may impose penalties including fines, damages, restriction of the debt collector's operations or closing down its operations, as occurred with CAMCO in 2006.
[31] Between 2010 and 2016 the Federal Trade Commission banned more than 60 companies that did not follow the Fair Debt Collection Practices Act.
[35] The debtor may grant a debt collector permission to the collection agency to speak to other people, but otherwise contact with an unauthorized person violates the FDCPA.
Among the protections the FCRA offers to consumers: In addition to state and federal laws, many U.S. collection agencies belong to trade association called ACA International and agree to abide by its code of ethics as a condition of membership.
