As a company or individual who has loaned out money to others, you might find yourself in a situation in which you have some unpaid accounts. Should you call a collection agency or a collection attorney? The following goes over some differences between collection attorneys and collection agencies so you can make a decision on which route to take.
The Size of the Debt
Many debt collection agencies have a whole group of agents who specialize in different types of debt. Collection attorneys might be a small portion of a large firm. Both can be beneficial, depending on the needs you have. A debt collection agency with specialized agents might be able to take on a case with smaller debt amounts. Even if someone only owes $25, those agents could work on getting it paid.
A collection attorney will often only take on a case if the debt amount hits a specific minimum. For example, the attorney may not take a debt amount less than $1000.
The Size of the Fee
Debt collection agencies often charge a little more than collection attorneys. They go through a lot of steps to get debts paid, and will often collect a fee for everything they try. Some debt collectors take a fee between 35% and 50% of the debt collected. In some cases, the collector is unable to get the debt paid, and will turn it over to a lawyer. The collector would then charge a greater amount to account for having to pay the lawyer.
Different collection lawyers charge in different ways. Some have a set rate for similar cases, and others will charge a percentage of 25% to 33% on each case. There’s also a chance the lawyer will charge on a contingency fee basis, which means he or she won’t take a portion unless you win the case and are awarded a judgment.
The Actions Taken
Debt collectors take different actions to collect a debt than collection attorneys do. Collection agencies are often more willing to get as close to the line as possible when it comes to things they can and can’t do. Their main tactic is contacting the debtor over and over again until the debt is partially or fully paid. This might include phone calls or written letters.
Collection attorneys typically send a letter to the debtor and leave it at that. If the debtor does not respond, and the creditor wishes to pursue legal action, that’s often when a lawyer really gets to work creating a lawsuit and getting the creditor the judgment.
Learning More Today
As a creditor, you take risks every day when you loan out money. If you’re working to get some debts paid back, a bankruptcy lawyer, like from Chorches Bankruptcy Law, may be able to help. Contact your attorney to learn more today.