With increasing defaults on debt due to a number of reasons, recovery or collection agencies are also specializing in handling various types of debt defaults depending on the nature of industry. The magnitude of the problem can be gauged from the fact that in 1997 alone the total amount recovered by collection agencies in U.S. amounted to a huge $32 billions as per American Collector Association figures. This article discusses some of the specializations in the debt recovery industry.

Medical or health care collection agencies partner with health care providers like hospitals and doctors' clinics to recover legal debt that may be owed by companies or individuals availing health care. The recovery procedure should be strictly in accordance with the provisions of law. This partnership allows the health care providers to focus on their job instead of pursuing defaults in payments.

Consumer recovery agencies provide services to retail operators like health clubs, telephone and other service providers. The debt owed may be club fees, telephone bills etc.

Commercial recovery agencies are those who serve banks and other institutions in the financial sector. Bad debts like credit card default, overdue loans on automobiles, pending mortgage payments etc. are some of the cases handled by these agencies. They usually buy the bad debts at a discounted rate from the institutions that gave the loan and then proceed to recover the debt.

Agencies that handle bad checks usually pay a sum upfront to the creditor as a percentage of the check amount. It may not be possible for an entity like say a consumer durables store to pursue each and every case of bouncing of checks. Hence they may prefer to hand over the case to a recovery agency that has the necessary resources to pursue it and recover the dues.

There are also specility collection agencies that collect for different industries such as: libraries, utilities, etc... These speciality debt collectors have very specific knowledge in these certain industries. This can be helpful if you industry is highly regulated or has multiple payer sources.

Once a bad debt account has been handed over to a recovery agency and the agency agrees to pay cash to the creditor as a percentage of the debt to be recovered, the liability of the debt gets passed on to the agency. This enables the creditor to show a healthier balance sheet. The creditor would not mind paying an upfront fee as recovering a bad debt would involve time and money even if done in house.