The term debtor refers to an individual who has a debt or owes a bill to a certain company or agency, and individual becomes a debtor due to some circumstances which makes them incapable of paying their debts as stated with the agreement. Some of the reasons include accidents causing an individual incapable of working, loss of job or any other unforeseen events that could affect their lives.



In commercial cases, debtors include corporations, proprietors or business owners who borrowed money for their business.

In cases where the debtor is incapable to pay, incurs overdue accounts or does not comply terms of payment, these creditors will then forward the debts to a collection agency. Upon receipt, the collection agency will do all necessary action in pursuing the payment of the debtors. The collection agencies earn from certain percentage of the money collected from the debtors.

These collection agencies are bound by government laws in order to prevent agencies from abusing their clients. The laws governing collection agencies differ from country to country.

Another option which has been developed in the United States is the debt buying. This system has tremendously grown as a profitable industry. Creditors sell their debts to these companies in order to gain some revenue from their receivables and avoid other legal suits resulting from debt collection. Debt buying is also gaining popularity in Asia, United Kingdom and the European region.

Almost all debt collectors of a collection agency are trained and motivated to ensure successful collection of payments. The most common method used is calling up the debtor through phone. The collectors are trained in positively convincing debtors to make payment. They are insistent without being too demanding.

The US government under the Fair Debt Collection Practice Act or FDCPA does not allow calls to any debtor if the call charge will be charged to the debtor. If the collector managed to talk to the debtor, it will do its best to build a good rapport with the individual or company who owes a debt and tries to provide some solutions by offering alternatives. The offer can be some sort of discount on the amount to be paid or a longer period of payment.

Collectors are allowed to call any of the debtor's relatives and neighbor to confirm the exact address of the debtor but should never reveal the information regarding the debt. In addition, the collector must be willing to provide his/her complete name and the employer when necessary.

In the United States, collection agencies would sometimes ask for the service of a collection lawyer. The lawyers will take charge in filing debt collection lawsuits in respective courts in behalf of the collection agency.

Once the lawsuit is filed, the debtor will then be notified by serving the court documents. In some cases, a Sheriff's Deputy will do the job. Upon receiving the lawsuit, the debtor must take action. If the debtor fails to respond on the given date, the court will grant the decision of default in favor of the collection agency.

The judgment favoring the lawyer of the collection agency will give the right to the collection agency to take necessary steps to collect payment from the debtor.

The most common method used as a result of the court's decision is by garnishing the salary of the debtor. This will be done upon the court's order of garnishment to the respective employer of the debtor. The debtor's paycheck will automatically be deducted by his/her employer a certain amount which will be given to the court and then goes to the lawyer of the collection agency.