Account collection: Should you use a lawyer or a debt collector?

What you will discover:

First, exhaust all other possibilities.
Choose between a debt collector and a lawyer next.
Then, select the appropriate professional.
So, what now?

Aside from metermaids, there are not many jobs with a worse reputation than debt collectors.

They are the kind of goons who corner you in an alley and ask if you like having working kneecaps in those grainy old noir movies, with square hands and blackjacks. In less dramatic circumstances, there are the ones that bug you at meals, write venomous letters, and damage people’s credit.

Of course, these clichés are increasingly common in literature today. The Fair Debt Collection Practices Act of 1978 makes it unlawful for debt collectors to harass debtors, lie, deceive, or use any other unethical techniques to collect on outstanding obligations. Sure, getting contacted by a collector is still an unpleasant experience, but there is no need to be concerned about forgeries, 2 a.m. phone calls, or frothing thugs banging their knuckles.

We mention this because, on sometimes, company owners must call in the heavy guns to collect on debts owing to them. And if you are in that circumstance, knowing that debt collectors are not the boogeymen they once were should offer you peace of mind.

But how do you know when it is time to call a debt collector? If you do call one, how do you know they are honest and legitimate? Should you ever consider hiring a debt collecting lawyer?

Let us take a closer look at these difficulties.

First, exhaust all other possibilities.

If you have a debtor that is overdue on their payments, do not contact a collection agency first. This will not only come out as unduly pushy, but it will also eliminate any chance of receiving full payment. After all, debt collectors and attorneys will charge you fees and/or percentages of the total amount if you pay them. But we will talk about that later.

So, how do you exhaust all of your other options? In reality, you will be doing a lot of the same things that debt collectors would do: letters, phone calls, payment restructuring, and, if necessary, a reduced debt to at least obtain some return on what you are due.

However, one thing to remember is to begin politely and escalate the situation professionally. If you are friendly from the start, you will have a lot greater chance of being compensated.

Choose between a debt collector and a lawyer next.

So your letters, phone calls, and entreaties were futile? It is time to seek the assistance of a specialist. But who should you hire, a lawyer or a debt collection agency?

To begin, it is usually a good idea to seek the advice of an attorney. They may advise you on whether it is worth your time and money to pursue the case in civil court or via a collections agency. Furthermore, they will frequently write demand letters on legal stationary for you. This may seem to be a minor detail, but it is not. A professional letter from a licensed attorney might sometimes persuade your debtor to pay up. After all, debtors do not want to stand themselves in front of a court explaining why they have not paid you.

If your attorney’s letters go unopened, you must determine whether to use a collections agency, hire a lawyer, or abandon the case completely. If your debt is substantial and you are ready to go to court for a judgment or a lien, a lawyer may be your best choice. But keep in mind that if you are unwilling to take your client to court, it is probably not worth hiring an attorney to pursue it.

You could, on the other side, engage a collecting agency. Agencies have automated systems that follow up with your debtors, and with so many different collectors available, you are certain to find one that matches your company kind or debt amount. You just need to do some study. Collection agencies often charge less and exist because they are effective in recovering what their customers are due, but this is not a hard and fast rule.

Calculate the costs of both methods and decide which is best for your company and the debt you are attempting to collect. Make copies of all relevant receipts and letters you have sent to the debtor for both a debt collector and a lawyer. While collecting, they will be required to provide proof.

Then, select the appropriate professional.

Whether you choose an agency or a lawyer, you should conduct some research on who you are employing. Debt collection services exist in a variety of flavors; some specialize in certain industries, such as home repair bills or loan payback, whilst others are nationwide in scope and can locate debtors who have relocated without leaving a forwarding address more rapidly.

If you have decided to work with a debt recovery agency, look for one that specializes in your industry. Check to see if they have the necessary permits and whether they employ “skip tracing” (which may assist in locating debtors who have fled town). verify for insurance and, if feasible, verify references.

For additional information, see our “Five Tips for Hiring a Debt Recovery or Debt Collection Agency.”

When looking for an attorney, you should look into similar issues. How long have they been in business? Do they specialize with your particular debt? Can you contact their references? Will they represent you in court if it comes to that? Make certain that you receive the necessary responses. Inquire with the attorney about their plan and how they will follow up with you.

Check the cost structure for any expert you have picked, even if it seems obvious. After all, the goal here is to be paid what you are entitled. You do not want to spend all of your money and end up with nothing to show for it.

So, what now?

Sign a contract and sit back.

The nicest aspect about hiring a collections firm or an attorney is that you can finally stop worrying about debt collection. After all, you have delegated the task to a professional. If you have selected well, they will collect in a legal but relentless way, and you will be able to recoup at least some of what you are due. Sure, it is not a perfect answer, but it is better than bringing in the goon squad.