If you fall behind on your monthly bills, you may start to accumulate debt that must be repaid. When debts remain unpaid, the people or businesses you owe money to, known as creditors, can take steps to recover what is owed. This may include pursuing legal action against you.

In many cases, instead of handling the process themselves, a creditor may transfer your account to a licensed debt collection agency. When this happens, the agency is authorized to contact you and collect the outstanding balance on the creditor’s behalf.

It is important to understand that once a debt is referred to a collection agency, additional fees, such as collection charges and legal costs, may be added to the amount you already owe. These extra costs can increase your total debt significantly, so addressing the issue early is always the best option.