when a borrower defaults on a debt the lender or creditor may turn their account over to a debt collector or collections agency the debt is said to have gone to collections at this point this typically happens within three to six months of default depending on the creditor overdue payments on credit cards phone bills auto loans utility bills and back taxes are examples of debts for which collectors may be responsible 
debt collectors may contact the debtor in writing by mail or over the phone they can call the person s personal and work phones in some cases they may even show up on a debtor s doorstep collectors may also contact a debtor s family friends and neighbors to confirm the individuals contact information on file 1if the person agrees to pay the debt the creditor will usually pay the debt collector a percentage of the money it gets back unless they have a flat fee arrangement some debt collection agencies and other companies will purchase delinquent debt from creditors typically for pennies on the dollar then attempt to collect the debt for their benefit these collectors keep all of the money they collect if they re successful there are different types of debt collectors in house debt collectors are employees of the creditor third party debt collectors work for outside agencies that are specifically in the business of collecting other parties debts debt collector regulationsdebt collectors are regulated under the fair debt collection practices act fdcpa which is administered by the federal trade commission ftc the law which went into effect in 1978 is designed to protect consumers against unscrupulous collection practices 2 it prohibits the use of abusive unfair or deceptive practices during the collection process this includes the following the law also gives debtors certain rights for example if you send a letter to a debt collector telling them to stop contacting you the collector is required to comply this means they must stop contacting you in any way including over the phone or in writing 6the consumer financial protection bureau cfpb issued a new debt collection rule in 2021 that further clarifies what debt collectors can and can t do for example when a debt collector first contacts the debtor in any way it must provide certain information such as the debt collector s name and address the creditor s name the associated account number and the amount and itemized accounting of the debt they must also provide information on the debtor s rights and how they can dispute the debt if they believe it is inaccurate 5people who think a debt collector has broken the law can report them to the ftc the cfpb and their state attorney general s office debt collectors are not allowed to disclose information about your debt to another individual such as a family member friend neighbor coworker or employer without your express consent you can file a complaint with the ftc cfpb or your state attorney general s office if you have trouble with a collector you also have the right to sue the debt collector in state or federal court 4example of a debt collectorhere s a hypothetical example to show how debt collectors work let s assume that jesse owes abc bank 15 000 on a credit card they ve missed six months worth of payments because they re overwhelmed by debt the credit card issuer makes several attempts to try to collect on the arrears through its in house collection department after the last attempt the bank closes the card and sends jesse s account to a third party collection agency to assume collection activity once the account arrives the collection agency sends a letter to jesse advising them that it is now responsible for collecting on the account the agency may send letters and attempt to collect the debt by contacting jesse over the phone if the activity is successful the agency may get a fee or a percentage of the outstanding balance the rest is sent to the original creditor and the account is considered paid in full 