Collection agencies can be used in many ways by creditors in an attempt to collect debt on their behalf. One way is called is called 1st party collections.
This is where a collection agency will be asked to collect money on behalf of a creditor, but you would never know this, as they will be calling you using the name of the creditor they are collecting on vs. the name of the collection agency they work for.
In this example, the collection agency usually gets paid from the creditor on an hourly basis, and an hourly rate. This all depends on how many hours they are required to staff on those particular creditor files.
The creditor might tell the collection agency that they will need, 800 hours each month dedicated to working their portfolio. The collection agency can either hire 20 collectors working 40 hours per week, or they can staff the portfolio with part time staff, and use as many people they want to cover the 800 hours.
By doing this, they can cover more hours in a day and hopefully increase their production, and collect more money for the creditor.
Always remember, collection agencies compete against other collection agencies to be the top producer for the creditor. This is so they can get more business from the creditor than anyone else because of their top performance. The more money collected the more money they earn. So, if you are currently getting calls from a collection agency, they are going to say just about “anything” to get you to pay today.
In my video I provide a few more ways on how collection agencies work.
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