Debt recovery law is the process of pursuing payments of debts owed by individuals or businesses. A collection agency is an organization that specializes in debt collection, and most operate as agents of creditors. They collect debts for a fee or percentage of the total amount owed.
The person who owes the money for a service or purchase is the debtor. Debtors may not be able to pay (default) for a number of reasons: because of financial instability or over commitment; due to an unforeseeable event such as job loss or health problems; dispute or disagreement over the debt amount or what is being billed for; or dishonesty on the part of either the creditor or the debtor. The debtor can be either an individual person or an entity, such as a company. Collection of debts from private citizens is subject to more restrictive rules than businesses.
Collection agencies that specialize in debt recovery law come in different types. First-party agencies are usually subsidiaries of the company that the borrower originally owes money to. Third-party agencies, on the other hand, are separate companies hired by a company to collect debts on their behalf - often for a fee. Debt buyers, finally, purchase the debt at a reduced price and then try to collect the full amount from the borrower. Depending onwhich country you're in, there will be different rules and regulations regarding collection agencies.