A incassobureau is a third-party company that collects a past due amount on behalf of a creditor. A creditor is the business that extends you credit or a loan with the expectation that you will pay it back. Creditors often send outstanding debt to collections when they don’t receive a payment within 90 days, so that they can hire another company to pursue the money that is owed to them. That other company is a debt collector, and they usually take a percentage of what they collect as their fee.
Some companies that extend credit will use their own in-house debt collectors to pursue the money owed. But many creditors will sell your debt to a debt collection agency when you become severely delinquent, as this allows them to get a better price for the outstanding debt and saves on in-house costs.
Legalities and Liabilities: A Guide to Debt Collection Agency Practices
The rules for debt collectors vary, but they can’t harass you and are generally required to put their contact information in writing. This includes their name, phone number, and address. They also must provide you with a “debt validation letter” that identifies the debt they claim to be collecting and its amount, as well as proof that it is yours. This must be provided within five days of contacting you, either in writing or by phone.
Debts in collections can remain on your credit reports for seven years from the date they first went delinquent. To keep those from affecting your scores too much, it is important to negotiate and begin making payments right away. If you do decide to make payments, be sure to ask that the account be updated on your credit report to reflect a paid status.