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This glossary defines 25 terms creditors, agencies and law firms use when accounts go past due, from charge-off and placement to the FDCPA and Regulation F. Each entry links its primary source, and entries that state a rule show where that rule stands and when it was last checked.
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An account scrub is a check of accounts against outside data before they're placed with an agency or sold. A typical scrub looks for bankruptcy filings, deaths, active military service, bad addresses and phone numbers, and accounts already in a lawsuit. It's also called a pre-placement scrub or data scrub.
It's often confused with skip tracing, which finds a person's current contact details. A scrub decides whether an account should be worked at all. Bankruptcy is the clearest case: a bankruptcy filing operates as an automatic stay of most collection actions against the debtor.
Example: a lender scrubs 10,000 charged-off accounts, pulls the 140 in bankruptcy, and places the rest with the scrub date attached.
Where the rule stands
Source: U.S. Code, 11 U.S.C. 362, automatic stay, current text
Related terms: skip tracing, placement, charge-off
The bad-debt-to-sales ratio is bad debt expense for a period divided by credit sales for the same period. It shows how much of what a business sells on credit it doesn't expect to collect.
Finance teams track it monthly or quarterly to test their credit policy. A rising ratio can point to looser approvals, weaker customers or slower collections. It's different from a charge-off rate, which counts the balances written off. The IRS describes a business bad debt as a loss from a debt created or acquired in a trade or business that became partly or totally worthless.
Example: $150,000 of bad debt expense on $10,000,000 of credit sales is a ratio of 1.5%.
Source: IRS, Topic no. 453, Bad debt deduction, page updated Sep 24, 2026
Related terms: charge-off, credit and collections policy, liquidation rate
The call frequency limit, often called 7-in-7, is Regulation F's test for when a debt collector's phone calls are presumed to harass. A collector is presumed to comply if it calls a person about a particular debt no more than 7 times in 7 consecutive days, and doesn't call within 7 days after a phone conversation about that debt. Going over either limit creates a presumption of a violation.
The count runs per debt, so a person with 2 debts in collection can get calls about each. Some calls don't count, such as calls that don't connect.
Example: after a Monday conversation about a debt, the next call about that debt waits until the following Monday.
Where the rule stands
Source: CFPB, Regulation F, 12 CFR 1006.14(b), eCFR current text
Related terms: Regulation F, FDCPA, cease-communication request
Learn more: Reg F call limits: what counts toward 7-in-7
A cease-communication request is a consumer's written notice telling a debt collector to stop contacting them about a debt, or saying they refuse to pay it. Once it arrives, Regulation F bars further communication about that debt, with narrow exceptions: telling the consumer that collection efforts are ending, or that the collector or creditor may use a specific remedy it ordinarily uses.
It's different from opting out of one channel, such as a single email address, which doesn't stop all contact.
Example: a consumer mails a letter saying "stop contacting me." The agency flags the account, stops calls and letters, and tells the creditor.
Where the rule stands
Source: CFPB, Regulation F, 12 CFR 1006.6(c), eCFR current text
Related terms: dispute, FDCPA, call frequency limit
A charge-off is a lender's accounting step that moves a loan it no longer expects to collect off its books as a loss. The balance is still owed, and the lender or a buyer can keep collecting it.
For banks, federal supervisory policy sets the timing: closed-end retail loans are charged off at 120 days past due, and open-end loans such as credit cards at 180 days. Charge-off is often when accounts are first placed with an outside agency or sold.
Example: a credit card account reaches 180 days past due, is charged off that month, and goes to a primary agency the next week.
Where the rule stands
Source: FFIEC agencies, Uniform Retail Credit Classification and Account Management Policy, 2000
Related terms: re-aging, placement, debt buyer
A contingency fee is what a collection agency earns as a share of the money it recovers, usually a percentage of each payment. If nothing is collected, nothing is owed.
Rates vary with the age, balance and type of the accounts, and with the stage: a second or third placement usually costs more than the first. It's different from a flat fee, which is charged per account whatever the result. Federal collection contracts use the same model; a contract to collect debts owed to the United States may provide that the fee is payable from the amount recovered.
Example: at a 25% contingency fee, a $1,000 payment leaves the creditor $750.
Source: U.S. Code, 31 U.S.C. 3718(d), current text
Related terms: net-back, liquidation rate, placement
A credit and collections policy is a business's written rules for who gets credit, on what terms, and what happens when a customer pays late. It usually sets credit limits and who approves them, reminder and statement timing, when to stop further credit, when to place an account with an agency or attorney, and when to write it off.
Written rules let a business treat similar accounts the same way and show an auditor what it did. Banking supervisors ask the same of lenders: federal policy says banks that re-age accounts "should establish a reasonable written policy and adhere to it."
Example: a distributor's policy holds new orders at 60 days past due and places the account with an agency at 120.
Source: FFIEC agencies, Uniform Retail Credit Classification and Account Management Policy, 2000
Related terms: bad-debt-to-sales ratio, re-aging, placement
Credit reporting, in collections, means furnishing information about a debt to a consumer reporting agency, such as one of the national credit bureaus. A furnisher must not report information it knows or has reasonable cause to believe is inaccurate.
Regulation F adds a step for debt collectors. Before reporting a debt, the collector must speak with the consumer about it, or send a letter or electronic message and wait a reasonable time for any notice that it couldn't be delivered. State laws can add limits, and medical debt has its own patchwork: the CFPB's 2025 medical-debt rule was vacated on Jul 11, 2025, and state limits face preemption challenges.
Example: an agency mails its validation notice, waits the set period with no undeliverable notice, and then reports the account.
Where the rule stands
Source: CFPB, Regulation F, 12 CFR 1006.30(a), eCFR current text
Related terms: validation notice, dispute, debt collector
A debt buyer is a company that buys delinquent or charged-off accounts from creditors, usually for a small share of face value, and then collects them itself or through agencies and law firms. Once it owns the accounts, the buyer decides how they're collected.
Creditors that sell often place accounts with agencies first and sell later. Public price data is dated: the Federal Trade Commission's January 2013 study found buyers paid an average of 4.0 cents per dollar of face value for portfolios bought from 2006 to 2009.
Example: a lender places accounts with a primary and then a secondary agency, and sells what's left after the secondary placement.
Source: Federal Trade Commission, The Structure and Practices of the Debt Buying Industry, January 2013
Related terms: charge-off, placement, time-barred debt
A debt collector, under the FDCPA, is anyone whose main business is collecting debts, or who regularly collects debts owed to someone else. Collection agencies and collection law firms usually fit.
A creditor collecting its own debts in its own name usually falls outside the definition. It becomes a debt collector if it uses another name that suggests a third party is collecting. The label matters because the FDCPA and Regulation F apply to debt collectors.
Example: a utility's own billing team calling late customers is usually outside the definition; the agency the utility places accounts with is inside it.
Where the rule stands
Source: U.S. Code, 15 U.S.C. 1692a(6), current text
Related terms: first-party collections, third-party collections, FDCPA
A dispute is a consumer's statement that all or part of a debt isn't theirs, isn't owed or is the wrong amount. If the consumer disputes in writing within the 30-day validation period, the collector must stop collecting the disputed part until it mails verification of the debt or a copy of a judgment.
Consumers can also dispute by phone. Writing within the validation period is what triggers the duty to verify.
Example: a consumer writes on day 12 that the balance is wrong. The agency pauses collection on that amount, gets verification from the creditor and mails it.
Where the rule stands
Source: U.S. Code, 15 U.S.C. 1692g(b), current text
Related terms: validation notice, cease-communication request, credit reporting
The Fair Debt Collection Practices Act (FDCPA) is the federal law that sets rules for how debt collectors collect consumer debts. It bars harassment, false or misleading statements and unfair practices, and it gives consumers the right to a validation notice, to dispute a debt and to stop contact.
It covers debts for personal, family or household purposes. Congress passed it in 1977 "to eliminate abusive debt collection practices by debt collectors." The CFPB's Regulation F sets out its rules in detail.
Example: an agency working a consumer's credit card balance must follow it. The same agency collecting an unpaid invoice from a business is outside it.
Where the rule stands
Source: U.S. Code, 15 U.S.C. 1692, current text
Related terms: Regulation F, debt collector, validation notice
Learn more: Reg F call limits: what counts toward 7-in-7
First-party collections is collecting your own customers' past-due accounts in your own name, with your own staff or an outside firm working as part of your team. Early-stage collections before charge-off are usually first-party.
Under the FDCPA, a creditor's own officers and employees collecting in the creditor's name aren't debt collectors. A creditor that uses a different name suggesting a third party is collecting becomes one. Whether an outside firm working in your name is covered depends on the facts, such as whether the account was in default when the firm got it.
Example: a lender's own team calls borrowers at 30 days late. At 120 days, accounts go to a third-party agency.
Where the rule stands
Source: U.S. Code, 15 U.S.C. 1692a(6), current text
Related terms: third-party collections, debt collector, placement
TSI service: First-party collections in your name
A legal placement is sending a past-due account to a collection law firm, or to an agency's attorney network, to pursue it through the courts. The firm may send demand letters, file suit, win a judgment and then enforce it, for example through wage garnishment where state law allows. Creditors usually approve each suit first.
Lawyers who regularly collect consumer debts are debt collectors under the FDCPA, including when the collecting is done through lawsuits. The Supreme Court held so in Heintz v. Jenkins in 1995.
Example: a creditor sends balances over $5,000 with verified employment to its law firm, which asks the creditor to approve each suit.
Where the rule stands
Source: U.S. Supreme Court, Heintz v. Jenkins, 514 U.S. 291, 1995
Related terms: debt collector, placement, time-barred debt
TSI service: Legal recovery through a managed attorney network
The liquidation rate is the share of placed dollars an agency collects over a set period: dollars collected divided by dollars placed. It's the most common way creditors compare agencies.
Track it by placement month, so older and newer placements aren't mixed, and compare only similar accounts, since age, balance and account type drive the result. It's different from net-back, which subtracts fees.
Example: the IRS's private debt collection program shows the math. The Treasury Inspector General for Tax Administration reported in December 2024 that agencies had collected more than $2.4 billion, 3.8% of the more than $64.9 billion assigned since April 2017.
Source: Treasury Inspector General for Tax Administration, report 2025-300-004, Dec 20, 2024
Related terms: net-back, contingency fee, placement
Net-back is what a creditor keeps from collections after paying the agency: dollars collected minus fees and costs. It's the number that shows whether a cheaper agency is cheaper.
An agency with a lower fee can net back less if it collects less. Government programs report it the same way: the Treasury Inspector General for Tax Administration put the IRS's private collection program at net revenues of about $1.66 billion from April 2017 through March 2024, after commissions.
Example: Agency A collects $110,000 on $1 million placed at a 19% fee and nets back $89,100. Agency C collects $120,000 at a 25% fee and nets back $90,000.
Source: Treasury Inspector General for Tax Administration, report 2025-300-004, Dec 20, 2024
Related terms: liquidation rate, contingency fee, placement
A placement is a batch of accounts a creditor sends to an agency or law firm to collect, with the terms attached: how long the vendor keeps the accounts, the fee, and what the vendor may do. Each account should sit with one vendor at a time.
Placements are named by stage. A primary placement goes to the first agency, and accounts it doesn't resolve can move to a secondary and then a tertiary agency. The Federal Trade Commission's 2013 debt buying study described creditors that sell a share at each stage, for example 25% right after charge-off and 25% after the primary agency.
Example: a card issuer places 180-day charge-offs with a primary agency for 6 months, then recalls and re-places them.
Source: Federal Trade Commission, The Structure and Practices of the Debt Buying Industry, January 2013
Related terms: recall, legal placement, liquidation rate
Re-aging is resetting a past-due account to current status after the borrower shows renewed willingness and ability to pay, without paying the full past-due amount. Lenders use it for customers who are back on track.
For banks, federal supervisory policy limits it. An open-end account should have existed for at least 9 months, and the borrower should have made at least 3 consecutive minimum monthly payments. It shouldn't be re-aged more than once in 12 months or twice in 5 years.
Example: a cardholder 90 days late makes 3 on-time minimum payments, and the issuer re-ages the account under its written policy.
Where the rule stands
Source: FFIEC agencies, Uniform Retail Credit Classification and Account Management Policy, 2000
Related terms: charge-off, credit and collections policy
A recall is when a creditor takes accounts back from an agency or law firm, for example because the placement term ended, the account was paid or disputed, or the vendor broke a rule. A recalled account can be closed, kept in-house or placed with another vendor.
A clean recall reconciles the balance with the vendor and carries the account's history, including disputes, to the next one. Federal collection contracts write the creditor's control into law: the federal agency that's owed the money keeps the authority to "end collection action."
Example: at 180 days with no payment plan, accounts come back from Agency A and go to Agency B with their dispute notes.
Source: U.S. Code, 31 U.S.C. 3718(a), current text
Related terms: placement, net-back, dispute
Regulation F is the Consumer Financial Protection Bureau's rule that carries out the FDCPA. It sets the call frequency presumptions, the validation notice and its model form, rules for email and text messages, limited-content voicemails, record retention and the step before credit reporting.
It applies to debt collectors as the FDCPA defines them. Its text is at 12 CFR part 1006.
Example: under Regulation F, an agency keeps records of its collection activity on a debt until 3 years after its last collection activity on that debt.
Where the rule stands
Source: CFPB, Regulation F, 12 CFR part 1006, eCFR current text
Related terms: FDCPA, call frequency limit, validation notice
Learn more: Reg F call limits: what counts toward 7-in-7
Skip tracing is finding a consumer whose contact details are out of date, so the collector reaches the right person. Collectors use address and phone data, public records and, within legal limits, calls to other people.
Regulation F sets those limits. A collector contacting someone other than the consumer to find location information must give its own name, say it's confirming or correcting location information, and must not say the consumer owes a debt. Skip tracing is different from an account scrub, which decides whether an account should be worked at all.
Example: a letter comes back undeliverable, so the agency runs a skip trace before its next contact.
Where the rule stands
Source: CFPB, Regulation F, 12 CFR 1006.10, eCFR current text
Related terms: account scrub, Regulation F, placement
Third-party collections is collecting debts owed to someone else, usually by an agency or law firm working in its own name. It usually starts after charge-off, or when a business stops working an account in-house.
Third-party collectors are debt collectors under the FDCPA, so on consumer accounts the validation notice, dispute rights and Regulation F's call limits apply. They're usually paid by contingency fee, flat fee or both.
Example: a utility closes a final bill, places it with an agency, and the agency sends a validation notice in its own name.
Where the rule stands
Source: U.S. Code, 15 U.S.C. 1692a(6), current text
Related terms: first-party collections, debt collector, contingency fee
TSI service: Third-party collections
A time-barred debt is a debt for which the statute of limitations, the deadline to sue, has passed. Regulation F bars a debt collector from suing or threatening to sue on a time-barred debt.
The balance may still be owed and collected without a lawsuit. States set their own limitation periods, and some require disclosures or treat a payment as restarting the clock. Credit reporting time limits come from a different law.
Example: a creditor selling older accounts flags each one with its state limitation date, so the buyer knows which accounts can't go to court.
Where the rule stands
Source: CFPB, Regulation F, 12 CFR 1006.26, eCFR current text
Related terms: legal placement, debt buyer, credit reporting
A validation notice is the notice a debt collector gives a consumer at the start of collection, in its first communication or within 5 days after. It states the amount of the debt and how it was reached, the creditor, and the consumer's right to dispute and to ask for the original creditor's name.
Those rights run through the validation period, which ends 30 days after the consumer receives or is assumed to receive the notice. Regulation F includes a model form, Form B-1, that collectors can use.
Example: an agency's first letter on a new placement is its validation notice, and the agency records the date the validation period ends.
Where the rule stands
Source: CFPB, Regulation F, 12 CFR 1006.34, eCFR current text
Related terms: dispute, Regulation F, credit reporting
Vendor oversight is how a creditor manages the risk of work done for it by others, including collection agencies, law firms and debt buyers. It usually covers due diligence before hiring, contract terms, monitoring of complaints, calls and remittances, and plans for how accounts and data come back at exit.
The Consumer Financial Protection Bureau's service provider bulletin says legal responsibility may lie with the creditor as well as the provider. Banks also follow interagency third-party guidance, and regulators proposed replacing the 2023 version on Sep 15, 2026.
Example: a bank reviews each agency's complaints monthly and samples its recorded calls every quarter.
Where the rule stands
Source: CFPB, Compliance Bulletin 2016-02, Service Providers, 2016
Related terms: placement, recall, debt collector
Learn more: What changes for vendor oversight under the proposed third-party guidance
General information, current as of Nov 2, 2026. It isn't legal advice. Rules change and differ by state, so check the sources linked here and talk to your own counsel before you act on it.
TSI Research Team. Last reviewed Oct 30, 2026.
The Recovery Performance Diagnostic takes one portfolio, stage or segment and measures liquidation, net-back and complaint risk on your own accounts.
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