What do consumers know about debt collection?

We live in an age where people have access to an inconceivable amount of information at almost any given time. When individuals are walking down the street, shopping at a store or even waiting for hours in line at the Department of Motor Vehicles, chances are good that they have a phone with Internet capabilities in a pocket or purse. With a smartphone, tablet, laptop, PC or a host of other devices nearby, people can access almost any piece of data they want, from obscure historical facts hosted on online encyclopedias to their close friends' whereabouts, thanks to social media.

With this free-flowing information, it should be safe to assume that consumers are extremely well-educated about the fiscal choices they make and the industries with which they interact. That's not always the case.

While some of this miscommunication can be attributed to the fact that not everyone does their research, there are also a lot of myths and inaccurate date available. The old saying that we shouldn't believe everything we read certainly holds true during a time when anyone can post almost anything they want on the Internet.

This is part of the reason why it seems as if the majority of people think the debt collection industry is a bad one. The public has been regaled with tales of scammers and so-called "professionals" hunting consumers down and taking their money. While there have been some instances of poor practices and even crime, that represents a miniscule fraction of the recovery sector.

The fact is, debt collection is essential for a healthy economy and market as a whole, and individuals need to get the facts.

The basics

If people learn anything about recovery, they should understand that without this service, the economy would be very different. Collectors only become involved in people's finances after they've decided not to pay bills. If consumers were allowed to do this with no consequences, inflation and price markups would skyrocket so companies, hospitals and other organizations wouldn't have to operate at a loss.

Individuals should also know that the majority of recovery agents stick to the letter of the law and follow the proper procedures when taking back money rightfully owed to an organization. They don't - and cannot, by law - harass people in any manner. Moreover, most collection firms are willing to work out deals if people have trouble paying the money back. Drafting a repayment plan that works for all parties involved is in everyone's best interests.

It happens more than you think
People might be embarrassed, even standoffish, when dealing with debt collectors because they believe this is a rarity. In fact, that's not quite true. A recent study published by the Urban Institute revealed that 77 million Americans currently have an account of some type in collections. The average person owes approximately $5,200, the report found, and most have an account that's more than 180 days past due.

Work with collectors
Again, recovery agents tend to be very helpful and are willing to work with consumers - something that many people don't realize. Rather than viewing them as rigid regulators, people should be told that professionals are flexible and want what's best for all parties.

According to a Forbes piece outlining the steps consumers should take when interacting with debt collectors, negotiations are almost always possible. Industry experts may want to educate individuals, letting them know that they'll see the best results if they enter these discussions with an idea of what they can afford to pay.

Don't vilify the industry
It's through education that consumers will realize the recovery sector is advantageous for the marketplace and that professionals within it work for the betterment of the economy. Industry leaders need to strive to always follow best practices in order to make this a reality - one bad apple can ruin the whole bunch.

These experts may want to inform consumers that they should take media commentary with a grain of salt, no matter the source. Critics are everywhere, and people should form their own opinions. Take, for example, the recent article released by TIME Magazine, entitled "9 Ways to Outsmart Debt Collectors."

Although the piece offers individuals helpful recommendations like staying calm and collected while talking to recovery agents and checking their consumer credit report, the very title suggests that the industry is out to get people. The text also uses questionable terms such as "scare tactics" and "a range of tricks," which indicate that the sector is not legitimate.

As long as debt collection agents work with consumers - both to find repayment agreements that work well for all and to educate them about the true nature of the business - each party can benefit from the interactions.