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What Are Private Debt Collectors?

Private debt collectors are individuals working with an agency that is involved in the collection of outstanding debts by people either to banks and credit card issuers and private lending institutions. According to the latest information, the IRS has begun using the services of private debt collectors to recover outstanding and inactive tax receivables under the federal law enacted by the Congress in December 2015. The law has authorized the IRS to use private debt collectors for the recovery of outstanding and inactive tax receivables.

Private debt collectors were routinely used by credit card issuers, payday loan lenders, and some lending institutions for the recovery of outstanding money from their clients who had defaulted on the repayments. Private debt collectors are not individuals who are acknowledged to have a great reputation.

These people are forever prepared to use strong-arm tactics and even illegal methods for the collection of outstanding funds for their clients. In many cases, credit card issuers have been observed selling inactive credit card accounts to private debt collectors without intimating the cardholder and the debt collectors were indulging in underhand tactics for the recovery of unpaid balances.

Now that the IRS has begun using private debt collectors one hopes they would be required to follow the Fair Debt Collection Practices Act as it has been notified on the website of the IRS.

Why are private debt collectors feared?

As mentioned earlier private debt collectors were not governed by the Fair Debt Collection Practices Act earlier and had a free hand to recover outstanding monies that were due by using any method possible. The debt collectors did not hesitate to use strong-arm tactics and even threatened the people they approached for the money that was overdue.

Quite a few cases were reported to the law enforcement authorities for action against private debt collectors which had little or no effect. A number of private debt collectors were apprehended before being bailed out by the agencies they were working for. The absence of a proper law perhaps allowed these individuals to get away with the practices they employed for the recovery of the outstanding amounts.

Under the circumstances that were prevailing it was natural for the general public and especially people who had fallen behind on their payments to fear the arrival of private debt collectors. People were left with no options but to deal with the debt collectors in the best way they could to avoid unwanted trouble.

Areas where private debt collectors are not allowed to work in

Presently the Fair Debt Collection Practices Act has stipulated that private debt collectors cannot be assigned jobs of collection from the following categories of people.

  • Deceased.
  • Below the age of 18.
  • In designated combat zones.
  • From victims of identity theft.
  • People who are under examination, litigation, criminal investigation or levy.
  • People who are dealing with pending or active offers of a compromise.
  • People who have agreed to an installment program or are subject to a right of appeal.

The stipulations mentioned above are even applicable to the IRS and private debt collectors will be required to return accounts of taxpayers who may be falling into any of the situations which have been mentioned even after they have been assigned to private debt collectors.

It is unlikely that private debt collectors hired by the IRS would want to get into trouble with the taxpayers knowing full well that they would be reported and could lose their operating licenses. Moreover, the IRS to would not want to be in the bad books of the general public and would do everything possible to ensure that the private debt collectors hired by them would stay within the ambit of the law.

The fact that private debt collectors are now hired by the IRS does not give these individuals the freedom to believe they are above the law because the stipulations mentioned applying to them in all cases. Therefore regardless of the reputation, they have the are required to work according to the specifications provided by the law enforcement agencies.

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