First, we will define each of the important terms:
Collection agency – a collection agency is an agency that credit card companies or companies that are owed debt outsource or sell their debt to, in hopes to help recover unpaid balances or recover a portion of their liabilities. In some cases, the debt holder will simply outsource the debt with a debt collection agency, typically for a set period of time. In other cases, the debt holder will simply sell the debt and the rights to it to a collection agency.
Debt settlement company – A debt settlement company is that a company that consumers can hire to “represent” them and their interest in working to pay off their debt. They do so for a fee, which varies on a case-by-case scenario.
Here at Eastpoint Recovery Group, Inc., we recommend trying to work directly with your creditor or their debt collection agency, directly. The reason we recommend this is simple; Creditors and debt collection agency have a vested interest in resolving past due account that are on their books, or place in their office for collection. With that being said, we personally work extremely hard with our consumers to help them resolve their past due collections accounts. In some case, these are past dure credit cards, or in others, may be past due retail accounts. The alternative of paying a debt settlement company to resolve a past due, collection account, seems counterintuitive for a couple reasons. First, the idea of someone struggling to stay afloat financially, paying a third party to do something they can do themselves, seems to be counterproductive. The fees that you are going to pay a debt settlement company to resolve your past due credit card collection account, or retail collection account, could be used to allocate toward your pay off working with the creditor or collection agency directly. Another reason we advise working directly with the creditor or collection agency is that there have been many reports of scams within the debt settlement companies. For more information on this topic, review this link on the FTC website for more information; https://www.ftc.gov/news-events/media-resources/consumer-finance/debt-relief-credit-repair-scams.