What Is a Collection Agency?
When a tenant abandons a commercial lease or a homeowner stops paying their homeowners' association (HOA) dues, the creditor (the landlord or the HOA) suffers a financial loss. While the creditor has the right to file a lawsuit, doing so is often too expensive and time-consuming for smaller debts.
Instead, they often hire a collection agency. A collection agency is a specialized, third-party business dedicated solely to tracking down debtors, making aggressive demands for payment, and reporting the unpaid debts to major credit bureaus to ruin the debtor's credit score until they pay. The agency typically keeps a large percentage of whatever money they successfully recover (often 20% to 50%).
Regulation Under the FDCPA
Collection agencies are notorious for using aggressive tactics. Because of this, they are strictly regulated by the federal Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA). Under these laws, a collection agency is legally prohibited from:
- Calling a debtor before 8:00 AM or after 9:00 PM.
- Threatening the debtor with violence, or threatening to have them arrested (which is illegal, as there are no debtor's prisons).
- Discussing the debt with the debtor's neighbors, friends, or employer.
- Continuing to contact the debtor if the debtor explicitly requests, in writing, that the agency cease communications.
If a collection agency violates these rules, the debtor can sue the agency for statutory damages and attorney's fees.
Collection Agencies vs. Law Firms
While a collection agency can ruin a credit score and send aggressive letters, they cannot actually force a debtor to pay. Only a judge can do that. If a collection agency fails to secure payment, the creditor must hire a law firm to file a civil complaint. An attorney can obtain a court judgment, which allows them to legally garnish the debtor's wages or place a lien on their real estate—actions a collection agency has no power to perform.
Related Terms
- Homeowners' Association — Frequently uses collection agencies for unpaid dues
- Civil Complaint — The lawsuit required when collection agency tactics fail
- Damages — Awarded to a debtor if the agency violates the FDCPA
Barnes Walker Debt Recovery
Barnes Walker's attorneys assist Florida landlords and community associations in recovering massive commercial rent defaults and delinquent assessments, utilizing aggressive litigation and asset garnishment strategies that go far beyond the limited capabilities of standard collection agencies. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 559, Part VI (FCCPA)
The Florida Consumer Collection Practices Act prohibits abusive, harassing, or deceptive debt collection practices, with stricter protections than the federal FDCPA.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC