An incassobureau is a third-party company hired by businesses to pursue past-due invoices for goods or services. They charge a percentage of the debt they collect and have to adhere to strict rules set forth by the Fair Debt Collection Practices Act.
If a debt goes into collections, that means it has been at least 120 days late and that the creditor — usually the bank or lender where the debt originated — has given up on trying to recover it themselves. The debt then gets sold to a collection agency, which can only charge up to 25% of the amount they are able to recoup.
Some debt collectors can be aggressive and obnoxious. They can call and text consumers often, and they can use the threat of lawsuits or other legal action to try to force a payment from borrowers. However, it is important to do your research on collection agencies to find one that has a good reputation and that charges reasonable rates.
Debt Recovery Demystified: Navigating the Role of a Collection Agency
Ultimately, if you get a letter from a collection agency, you have the right to request in writing that they validate the debt that is being collected. This should include how much you owe, the name and address of the original creditor, and whether or not it’s old enough to fall within your state’s statute of limitations.
You may be able to negotiate a payment plan or a reduced amount, which can help minimize damage to your credit scores and reports. It’s also a good idea to check your credit reports regularly.