Collects the rags for recycling (7)
I believe the answer is:
gathers
'collects' is the definition.
('gather' can be a synonym of 'collect')
'the rags for recycling' is the wordplay.
'for recycling' indicates anagramming the letters.
'the'+'rags'='therags'
'therags' anagrammed gives 'GATHERS'.
(Other definitions for gathers that I've seen before include "Assembles" , "Draws together" , "Harvests" , "Infers" , "Understands" .)