Debt collectors often work for debt-collection agencies, though some operate independently, and some are also attorneys. Sometimes these agencies act as middlemen, collecting customers' delinquent debts—debts that are at least 60 days past due—and remitting them to the original creditor. The creditor pays the collector a percentage, typically 25% to 50% of the amount collected.Debt collection agencies collect delinquent debts of all types: credit card, medical, automobile loans, personal loans, business, student loans, and even unpaid utility and cell phone bills.
Collection agencies tend to specialize in the types of debt they collect. For example, an agency might collect only delinquent debts of at least $200 that are less than two years old. A reputable agency will also limit its work to collecting debts that are within the statute of limitations, which varies by state.
For difficult-to-collect debts, some collection agencies also negotiate settlements with consumers for less than the amount owed. Debt collectors may also refer cases to lawyers who file lawsuits against customers who have refused to pay the collection agency.