The Difference Between In House And Third Party Debt Collectors And Why It Pays To Know Who You're P

In the last article of this series I spoke about two different types of debt collectors: in house collectors and third party collectors

. In house collectors work directly for the creditor, while third party collectors work for a collection agency hired by the creditor to collect on late and unpaid accounts. I wrote that third party collection agents are bound by the rules and guidelines of the FDCPA, while in house collectors aren't. The FDCPA stands for Fair Debt Collection Practices Acts and it is full of strict guidelines that third party debt collectors must follow.

So, as you can imagine, many lawsuits spring up due to complications and confusions regarding debt collectors and the rules they must abide by: are they in house, or third party? Last article I brought up three examples, one being the Department of Education collecting on student loans. Anyone who works directly for the Department of Ed is not bound by the FDCPA, while the seventeen private third party collection agencies that it works with are. I mentioned a law suit about a hospital that sent out pre-collection notices to patients with medical debts. If the hospital was ruled a third party collector, everyone who received that notice would have been absolved of their debt. In this case the hospital was ruled a creditor instead.Finally, I brought up a personal situation I encountered with an in house debt collector that is kind of silly and ridiculous but pertinent nonetheless. I am notorious for taking out books from my local library and never giving them back, so last summer it got to the point that they sent a collection agent after me! The collection agent called my third party house phone and left a message for everybody to hear about the intimate details of my "delinquent account," and ask that either I return the books or pay the library for the cost of them. Fortunately for them, I love my library and was also aware of the fact that the collector was an in house, because she requested that I pay the creditor (the library) directly. I gave the books back, but let it be known that if I did not manage my finances as well as I do now, and had been called by a rude third party debt collector who did the same thing; there would have been hell to pay.To determine if they are work with third party debt collectors or in house collectors in court cases, the courts will take a lot of ideas into consideration to rule if the FDCPA applies or not. If the creditor hired a collection agency outside of its company, the agency's participation in the actual debt collection process must be minuscule. Questions the court will ask include: is the collection agency only a mailing service? Do they letters say if the debtor does not pay the debt will be referred for collection? (Third party collection agencies send out different letters, in house collectors send out these "warning" letters.) Is the collection agency only paid for sending letters?If the collection agency is paid on commission, it is most likely a third party collection company. Again, if the agency receives the payments and then forwards payments to the creditor itself, it is most likely a third party collection agency. If a debtor does not respond to the letter and the collection agency has no further contact with the debtor, or if it does not get a hold of the files on the debtors, it is most likely not a third party collection agency. The lesson to be learned here is that when it comes to personal finance, it is important to know who you are giving your money to. A simple question as to whether you are speaking with a third party debt collector or an in house collector can guide the conversation because you will know their limits, like in the case of me and the library, or all of those people in the hospital that might have gotten away with not paying their medical bills.by: Mallory Megan

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