What is Debt Collection?
The definition of debt collection is the act of collecting debts on behalf of a creditor. This typically involves talking with the debtor to try to arrange repayment. Debt collection can be carried out by licensed third-party agencies, law firms, financial institutions, or individuals.
By and large, the purpose of debt collection is to encourage the debtor (the person or organization owing money) to pay back their debts. Debt collectors make money by charging a fee for collecting repayments from debtors. In most cases, they work on behalf of creditors who have charged interest on an unpaid loan, such as credit card companies and lending institutions.