Who is a Debtor
The person who owes the bill or debt is the debtor. Debtors may fail to pay (default) for various reasons: because of a lack of financial planning or overcommitment on their part; due to an unforeseen eventuality such as the loss of a job or health problems; dispute or disagreement over the debt or what is being billed for; or dishonesty. The debtor may be either a person or an entity such as a company. Collection of debts from individual people is subject to much more restrictive rules than enforcement against a business.
Sales of Debt
An increasing number of collection agencies, sometimes referred to as "debt buyers", purchase debts from creditors for a percentage of the value of the debt and pursue the debtor for the full balance, sometimes plus "interest". This prevents a debtor from merely defaulting or forgetting a debt. It also generates immediate revenue, albeit much reduced, for the creditor and reduces the public relations risks involved with defaulted debt collection.[5]
Some states have specific laws regarding debt buying. For example, Kansas does not allow wage garnishments on purchased debt.
Some states have specific laws regarding debt buying. For example, Kansas does not allow wage garnishments on purchased debt.
What is a Third Party Agency
The term collection agency is usually applied to third-party agencies, called such because they were not a party to the original contract. The creditor assigns accounts directly to such an agency on a contingency-fee basis, which usually initially costs nothing to the creditor or merchant, except for the cost of communications. This however is dependent on the individual service level agreement (SLA) that exists between the creditor and the collection agency. The agency takes a percentage of debts successfully collected; sometimes known in the industry as the "Pot Fee" or potential fee upon successful collection. This does not necessarily have to be upon collection of the full balance; very often this fee must be paid by the creditor if they cancel collection efforts before the debt is collected. The collection agency makes money only if money is collected from the debtor (often known as a "No Collection - No Fee" basis). Depending on the type of debt, the age of the account and how many attempts have already been made to collect on it, the fee could range from 10% to 50% (though more typically the fee is 25% to 40%).[3]
Some debt purchasers who purchase sizable portfolios will utilize a Master Servicer to assist in managing their portfolios (often ranging in thousands of files) across multiple collection agencies. Given the time-sensitive nature of these assets, many in the Accounts Receivable Management (ARM) industry believe there is a competitive advantage in utilizing this technique as it gives the debt purchaser more control and flexibility to maximize collections. Master Servicing fees may range from 4% to 6% of gross collections in addition to collection agency fees.
Some agencies offer a flat fee "pre-collection" or "soft collection" service. The service sends a series of increasingly urgent letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and negative credit report. Depending on the terms of the SLA, these accounts may revert to "hard collection" status at the agency's regular rates if the debtor does not respond.[citation needed]
In many countries there is legislation to limit harassment and practices deemed unfair, for example limiting the hours during which the agency may telephone the debtor, prohibiting communication of the debt to a third party, prohibiting false, deceptive or misleading representations, and prohibiting threats, as distinct from notice of planned and not illegal steps. . In the United States, consumer third-party agencies are subject to the federal Fair Debt Collection Practices Act of 1977 (FDCPA), is administered by the Federal Trade Commission or FTC.
In the United Kingdom third-party collection agencies that pursue debts regulated by the Consumer Credit Act must hold a Consumer Credit Licence and work within the framework of the 2003 fair debt collection guidance; licences are issued and regulated by the Office of Fair Trading.[4]
Some debt purchasers who purchase sizable portfolios will utilize a Master Servicer to assist in managing their portfolios (often ranging in thousands of files) across multiple collection agencies. Given the time-sensitive nature of these assets, many in the Accounts Receivable Management (ARM) industry believe there is a competitive advantage in utilizing this technique as it gives the debt purchaser more control and flexibility to maximize collections. Master Servicing fees may range from 4% to 6% of gross collections in addition to collection agency fees.
Some agencies offer a flat fee "pre-collection" or "soft collection" service. The service sends a series of increasingly urgent letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and negative credit report. Depending on the terms of the SLA, these accounts may revert to "hard collection" status at the agency's regular rates if the debtor does not respond.[citation needed]
In many countries there is legislation to limit harassment and practices deemed unfair, for example limiting the hours during which the agency may telephone the debtor, prohibiting communication of the debt to a third party, prohibiting false, deceptive or misleading representations, and prohibiting threats, as distinct from notice of planned and not illegal steps. . In the United States, consumer third-party agencies are subject to the federal Fair Debt Collection Practices Act of 1977 (FDCPA), is administered by the Federal Trade Commission or FTC.
In the United Kingdom third-party collection agencies that pursue debts regulated by the Consumer Credit Act must hold a Consumer Credit Licence and work within the framework of the 2003 fair debt collection guidance; licences are issued and regulated by the Office of Fair Trading.[4]
What is a First Party Agency
Some collection agencies are departments or subsidiaries of the company that owns the original debt. First-party agencies typically get involved earlier in the debt collection process and have a greater incentive to try to maintain a constructive customer relationship.[3] Because they are a part of the original creditor, first-party agencies may not be subject to legislation which governs third-party collection agencies.
These agencies are called "first-party" because they are part of the first party to the contract (i.e. the creditor). The second party is the consumer (or debtor). Typically, first-party agencies try to collect debts for several months before passing it to a third-party agency or selling the debt and writing off most of its value.[citation needed]
These agencies are called "first-party" because they are part of the first party to the contract (i.e. the creditor). The second party is the consumer (or debtor). Typically, first-party agencies try to collect debts for several months before passing it to a third-party agency or selling the debt and writing off most of its value.[citation needed]
What is a Collection Agency
A collection agency is a business that pursues payments of debts owed by individuals or businesses.[1] Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed.[2]
There are many types of collection agencies. First-party agencies are oftentimes subsidiaries of the original company the debt is owed to. Third-party agencies are separate companies contracted by a company to collect debts on their behalf for a fee. Debt buyers purchase the debt at a percentage of its value, then attempt to collect it. Each country has its own rules and regulations regarding them.
There are many types of collection agencies. First-party agencies are oftentimes subsidiaries of the original company the debt is owed to. Third-party agencies are separate companies contracted by a company to collect debts on their behalf for a fee. Debt buyers purchase the debt at a percentage of its value, then attempt to collect it. Each country has its own rules and regulations regarding them.
Corporate Headquarters
Our Corporate Headquarters is located in the Orange County, California:
1800 E. Garry Street, Suite 114Santa Ana, CA 92705
Phone number: 1-714-772-6020
Email: info@cmarecoveries.com
Why Choose CMA
CMA is a full service provider of receivables management solutions. We operate in a number of large market segments that value what we stand for, namely:
High Value and Low Risk
CMA is well suited to provide its sellers with competitive bids and worry-free execution. Our impressive collector productivity and low cost to collect allow us to produce attractive bids that represent substantial value for our clients. We put our sellers at ease by retaining the accounts we buy and collecting on most of them using our internal operations . Our successful collection history, integrated pricing analytics, compliance controls, and our ability to back up our contractual obligations with our strong balance sheet makes CMA a top choice in the market.Easy To Work With
CMA can underwrite and close quickly when needed, attributes that many sellers highly value. We stringently avoid the industry rumor mill and do not talk about who we buy from or why any client may be selling. We combine great systems and people to create one of the best post-sale administration groups in the industry, making the seller's job easier and less costly. We are there for sellers, month after month, year after a year.We're Giving Debt Collection A Good Name
It is our belief that treating our customers well is not just the right thing to do, it is just good business. We invest in our people and promote good behavior and compliance. We attempt to work with our customers as our first approach. Litigation is typically used if we find a customer who is able, but unwilling to pay.
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