Third-party collection agencies and debt lawyers collected and returned more than $32.2 billion to the U.S. economy in 1997 according to the American Collectors Association.
The most logical choice to collect an unpaid debt is a collection agency. The cost differs, but generally you will pay 25 to 30 percent of the amount returned, some agencies need a 50-50 split. Dissimilar to debt lawyers a collection agency will take many of the same operations against the borrower that you have probably taken. Phone calls, numbers of letters will be sent warning of the consequences of ignoring repayment.
There are also debt lawyers who specialize in debt collection. They would be more effective than a collection agency, especially if the debt is big enough to consider legal process. A debt lawyer will charge an hourly fee or collect at least one third of the amount returned, or both. Debt lawyers generally charge a minimum fee or require the debt you want to return be of a minimum amount. Fee of the lawyer will be charged in addition to any court fees and charges connected with a lawsuit, if you decide to pursue a judgment in court. If don't want to take your customers to court over a past-due account, then there is probably no reason to hire a debt lawyer.
Most firms at first refer debt to a collection agency and then turn to a debt lawyer if the agency can't do the job. It seems that a collection agency would be cheaper than hiring a debt lawyers, but it's not always the case. The price of a collecting a debt depends on the complexity and magnitude of the collection - sometimes debt can be collected with two simple letters from a collection agency, but sometimes you should hire a lawyer immediately, send the required set of collection letters and head to the court. The most expensive case is working with a collection agency only to have to hire a debt lawyer later.
If you choose to use a collection agency or a debt lawyer to return the money you are owed, you should ask for a client list before you start. Manage to meet the owner or a manager of the collection agency or one of the partners of the law firm before you turn over your debt. A decision to hire should not be fully based on price or percentage - the promise of a higher fee can help motivate the collector to bring in more cash.
