Adjustment Bureau

What Is an Adjustment Bureau?

An adjustment bureau is an organization that focuses on helping businesses to collect outstanding debts from delinquent debtors. Adjustment bureaus are also known as collection agencies. Most adjustment bureaus earn a percentage of the outstanding debt upon successful collection. An adjustment bureau is not a loan agency or a debt consolidation service; they serve their business clients as opposed to the debtors.

Key Takeaways

  • Adjustment bureaus, also known as collection agencies, help businesses collect outstanding debts from delinquent debtors.
  • Adjustment bureaus charge fees on a sliding scale and generally get a percentage of the overall debt.
  • Their collection practices are governed by the Fair Debt Collection Practices Act (FDCPA).
  • Debtors can sue adjustment bureaus for violating the FDCPA, for example, if they employ predatory tactics.

Understanding an Adjustment Bureau

While most adjustment bureaus are privately owned, they operate under collection laws established by the federal government. These laws are in place to prevent abusive practices. The Fair Debt Collection Practices Act (FDCPA) is the primary federal law governing debt collection practices in the United States. Under it, a consumer may sue an adjustment bureau that has violated the Act.

The Federal Trade Commission (FTC), or the state attorney general of the state in which the bureau operates, also has the authority to impose penalties against a collection agency that does not comply with the FDCPA. These penalties can include damages or fines, restricting the adjustment bureau’s operations, or shutting them down. They also publish a list of banned debt collectors.

Under the FDCPA, debtors have the right to the following protections:

  • The right to request validation of the debt in writing;
  • The right to demand that the adjustment bureau or collection agency cease communications;
  • The right to collect attorney’s fees from the debt collector if the debtor sues to verify the debt and the debt is found to be bogus;
  • Freedom from debt collection calls that cost the debtor toll calls;
  • Limits on the times of day at which debt collectors can call debtors;
  • Freedom from the use of deceptive or illegal collection practices, such as threats or impersonating law enforcement;
  • Freedom from use of obscene language by the debt collector;
  • The right to information about the nature of the call, the name of the person calling, the name of the adjustment bureau they are calling from; and
  • Freedom from debt collection calls at their place of work.

Many states also have laws regulating the collection practices adjustment bureaus may use. The FDCPA dictates that in the case that a state law is more restrictive than the federal law in governing debt collection practices, the more restrictive state law will be applied.

Adjustment Bureau Fees

Fees charged are usually on a sliding scale and on a contingency basis. The fee structure can range from a flat fee to a contingency basis in which the agency gets paid only if they manage to successfully collect the amount. For example, the larger the outstanding debt, the smaller the percentage earned.

The amount earned on a $2,000 balance might be 10%, but the amount earned on a $10,000 balance would be 8%. Fees for adjustment bureaus also depend on the volume of business received from their clients. In such cases, fees may be spread over higher volume accounts that may not have a substantially large individual collection.

How to Handle an Adjustment Bureau

Receiving calls or letters in the mail from adjustment bureaus to collect on outstanding debt can be stressful, especially if you are not in the financial position to pay off the debt. However, if it is possible, it is best to pay off your delinquent debt as it severely impacts your credit score and sits on your credit report, making it difficult to take on any further debt, such as a mortgage or personal loans.

If you can't pay off your debt in full, you should try and work with the creditor on a payment plan that is feasible. If you disagree with the debt then it is best to dispute the false debt account to the credit bureau. It's also important to continue to pay your other bills on time so as to not end up with more accounts in collection.

Article Sources
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  1. Federal Trade Commission. "Fair Debt Collection Practices Act." Accessed Feb. 4, 2021.

  2. Federal Trade Commission. "Legal Library: Banned Debt Collectors."