Legal ones are the ones that telco companies (maxis, digi, celcom) go for to collect bad debts. They call you non-stop and then send you threats and lawyer letter.

Illegal ones come with red paint and molotov when you are sleeping midnight

Rather than losing that entire debt amount, they sell it to legal debt collectors for a small fraction of the amount. Now from 0, at least they gain back some money from your debts.
Then the legal debt collectors will chase you for the full amount and earn from the margin difference.

Some legal debt collectors do by commission. If they can make you pay your debt, they get a percentage commission as well.

Imagine you alone owe one thousand, if 100,000 people owe the same amount, imagine how much the debt each telco holds.

It depends on who handles your case la. Small amount they will just call you and send you lawyer letter (usually applicable to telco debts).

If big amount, they can go unethical ways even though they are called legit debit collectors. Some will harass your parents, harass your gf, harass your siblings, call them non stop, put banner everywhere. Imagine if you fierce a bit, then can collect few thousand as salary, easy job who dont want to do?

Owe money must pay la. Police won't do anything at all. By the time police come to help, damage already done. If they know you involve police, you make them even more angry, then good luck.

Usually people try to negotiate and work out a payment plan rather than making police report la