What’s the difference between a debt collection company and an investigation agency? Find the right partner for handling bad debts.

What is debt collection? It refers to the process when someone borrows money but delays repayment to the creditor, or even disappears and cuts off contact. In such cases, you can hire an investigation agency or a debt collection company to help recover the debt from the debtor.

Investigation agencies originally became known for handling infidelity investigations and debt recovery, which leads some people to wonder: Are investigation agencies the same as debt collection companies? In movies, dramas, and news reports, debt collection companies are often portrayed as violent or unreasonable. Some people even believe that so-called “debt collection syndicates” don’t really exist, and they may confuse investigation agencies with these groups. However, there are important differences between the two.

Investigation agencies aim to resolve issues through peaceful and rational means. By contrast, some debt collection companies may hire underworld figures to intimidate debtors, or even threaten the debtor’s family, friends, colleagues, or supervisors, causing severe psychological pressure. Investigation agencies focus on finding solutions that satisfy both the creditor and the debtor, as the ultimate goal of debt collection is to recover the money owed—not to instill fear.

Are most debt collection companies legal? Things to consider when collecting debts.

In fact, many companies that advertise themselves as "asset management companies" are actually debt collection companies. So, are debt collection companies legal? The government allows debt transactions, meaning these companies can first purchase "debts" from creditors and then collect the debts from the debtors.

Before hiring an investigation agency or debt collection company, you can try applying for a payment order from the court in the debtor's jurisdiction. If the debtor receives the payment order and does not raise any objections within 20 days, you can request the tax bureau to investigate the debtor’s assets, which can lead to enforcement actions like a forced auction.

The above steps apply when the debtor can be located. If you cannot find the debtor, you may need to seek help from an investigation agency or debt collection company. It’s advisable to first consult with the company you plan to hire and then decide on the next steps.

How do debt collection companies charge?

The fees mainly vary depending on the difficulty of the case. Generally, the costs include service fees, a commission based on the success of the debt recovery, and an evaluation of the debtor's identity, the complexity of the case, and the type of debt involved. If the debtor cannot be located, you may need to pay an additional fee for locating the person. Only after the debtor is found can the outstanding debt be recovered.

Do debt collection companies use different methods compared to investigation agencies? It’s more appropriate to seek a legally registered company.

There are various methods for debt collection. Some can be peaceful and rational, while others may resort to violence to intimidate people. Some unethical debt collection companies, in an attempt to pressure debtors into repayment, use extreme tactics such as throwing paint, eggs, threatening the debtor’s family, or harassing friends and relatives. While these actions may result in repayment, if they go too far, they could violate the law. If the debtor is truly unable to pay, such extreme methods will not be effective. It’s better to seek a legally registered agency that employs a gentle and effective approach, such as offering fair and mutually acceptable terms. This way, repayment can be achieved without harming innocent parties.