Collection Agency Jobs & Other Third Party Collectors
The definition of third party debt collection is any person or entity collecting the debt on behalf or in lieu of the original creditor. Collection agencies, attorneys, or debt purchasers create the core of third party collections.
Third party debt collection operates mainly on a commission. When an original creditor places debt with a third party collection agency, a practice called contingency, that collection agency will earn a commission on what they collect for the client. Usually the commission is a percentage of the amount collected. Consequently, almost all third party agencies will have a commission structure in place for their debt collectors.
Commission structures vary from agency to agency, but they exist for a single purpose, as incentive to get the best work possible from financially motivated employees. For that purpose, commission structures work. Any focused individual can earn a respectable living in debt collections. Because of commission structures, working for a third party collection agency can be a very lucrative venture. A common quality of collection agencies is that almost all of them will reward an employee for their hard work. Collection agencies love individuals who are always on time, always productive, and eager to make money. A collection agency’s commission structure will cater to individuals with these qualities.
As previously stated, commission structures will vary, but they usually follow a formula of recouping the amount of money it costs to have a collector working. Essentially, once a collector has paid his keep, so to speak, they are eligible for bonus. Commission is earned from the net amount recovered, the portion that the agency earns as commission from on contingency placement. Once a collector is in bonus, they will earn a percentage of the money that they have collected. Each month has a goal. If a collector exceeds the goal, then they will receive a bonus payment the following month.
A company which purchases debt, because they have bought the accounts outright, will retain all monies collected on their accounts, as they have full ownership of the accounts. A debt purchase company often will have the same commission structures in place as an agency that operates off contingency. Interesting to note, that when a debt purchase company obtains accounts, they do not become a first party collector through that purchase, and must abide by the FDCPA as a third party collector.
This is because first party collectors are the originators of the debt, and a simple purchase of debt will not elevate a third party to first party status.
The benefits of working for a third party collection agency are, of course, commission or the ability to make considerably more that the wage or salary. Another benefit is the opportunity to learn about the many facets of debt collections, and perform several job functions pertaining to debt collection. Third party debt collection is more competitive and provides an energetic environment. Many seasoned collection managers in a third party agency will make excellent mentors in a career in debt collections.