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Should You Work With an Attorney or Collection Agency to Collect Business Debts?

Should You Work With an Attorney or Collection Agency to Collect Business Debts?

Settling debts is no trifling matter, to be sure. Even when there are no conflicts involved with settling these debts, you still have to put in the work to collect them and square everything away. But what happens when you have to deal with an obstinate debtor who, either through an inability to pay or sheer unwillingness? It is certainly no fun to have to deal with someone who shirks their responsibilities, and at that point, things are likely going to get litigious if you expect to recoup what you are owed. When it comes to dealing with business debts, however, it begs the question: which is more beneficial for your interests, an attorney or a collection agency?

The pros and cons of an attorney versus a collection agency: figuring out what works best for you

The first thing you should make sure to take care of is ensuring that you have actually taken every reasonable avenue possible in order to settle this person’s debt in the least headache-inducing fashion. Phone calls, letter writing, invoices, even meeting in person. If these either fall through or even fail to materialize (in the case of an in-person meeting), then it is time to get things going with litigation or collection. It is important to figure out exactly which benefits your situation better, as an attorney and a collection agency have their own benefits depending on the kind of situation you are dealing with.

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One of the biggest indicators of whether a collection agency or an attorney is the right fit is going to be based on the severity of the debt. In a situation where the debt is small enough that it may prove to be financially disadvantageous to go the litigation route, you would be best served in going with a collection agency. A collection agency specializes in dealing with delinquent debts, defined by whether they are at least 60 days past due. Once the debt is collected, the collector will be given a portion of what was collected, and you get the rest. It is certainly not very fun to have to give a portion of that cost away, but it is better than getting nothing whatsoever. This rate varies, landing anywhere between 25 to 50 percent of the debt. Such agencies work with a variety of different types of debts, including medical, student loans, auto loans, credit card debts, and others. Your best bet to get the best debt collection service is to utilize a debt collection service that specializes in certain types of debts. That specialization may be in the amount of money being collected, the type of debt being recouped, and other relevant variables. Debt collection agents may also pursue a compromise between the debtor and the debtee in the event that actually pursuing the debt is going to ultimately be more costly than doing a compromise. Again, this may not be the best solution for you, but it is certainly not the best idea to pursue a debt simply because of the principle behind it. If you determine that it is not worth pursuing anymore, you can simply sell the debt to a debt buyer for a lower value than the full value of the debt and merely cut your losses at that point. Debt collection is not too much different from the processes that you likely went through already, although they have the tools and the resolve to be able to focus on getting that debt, rather than you having to do your normal job AND try to recoup this money.

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On the other hand, an attorney that specializes in resolving a debt owed to you may be the best option if the debt is more severe. This may not be a good idea if the debt is not significant, as the cost of involving an attorney may be more than the debt is actually worth. In fact, an attorney may not be willing to work with you on this if the debt is not worth a certain amount of money, just to ensure that you don’t waste your time and money on something they may think a relatively trifling matter. Sometimes, an attorney specializing in debt collection will only be hired after debt collection has failed to produce results. It is up to you to decide whether you want to start with a debt collection and move onto an attorney if things fall through, or if you want to start with the attorney from the very beginning. The latter may be a worthwhile decision on your part if you think that the person who owes you a debt is unlikely to be receptive to a debt collection agency.

Whether you are collecting commercial debt, collecting personal debt, or collecting other forms of debt, it is important to be mindful that you deal with this swiftly and surely before the situation becomes more of a headache than it needs to be. It will be a better situation for everyone involved if you take care to do that.

Should You Work With an Attorney or Collection Agency to Collect Business Debts? was last modified: by