There are a lot of benefits that come with owning your own company. There are a few downsides to doing so. One of these is having to collect debts when a customer fails to pay what they owe.
If you have a customer with a delinquent account, you’ve likely already pulled out all the stops to collect what they owe you. That’s likely why you’ve decided to see what other options are out there for collecting what you’re due. If you’re struggling to decide between working with a collections attorney or debt collection agency, then you’ll want to continue reading below to better understand how they differ.
What can a debt collection agency do?
Debt collection agencies often use auto-dialers and other specialized software programs to try and get a debtor on the phone to collect what they owe. They may also send your debtors letters about their delinquency. Their chief value is the fact that they are persistent — and you don’t have to spend your time trying to collect the debt. In other respects, however, they have no more power than you.
Existing federal laws restrict debt collection agencies from posing as attorneys. Debt collection agencies may receive payment for their efforts in several different ways, including on a contingency basis or based on a percentage of what they collect. Debt collection agencies may also assess a flat fee depending on the size of the debt.
What can an attorney do that a debt collector cannot?
Attorneys can fast-track the collections process by filing a lawsuit against a debtor. That’s usually the superior choice when you have a significant business debt that must be collected because they have more authority and legal savvy.
Sometimes, just having an attorney involved can shake payment loose from a reluctant debtor. If that fails, however, your attorney is already prepared to take further legal action — and that can save you a lot of time and effort.
Is a debt collection agency or collections attorney best for you?
It can be very challenging to keep your head above water when clients don’t pay. While you may think that having a debt collection agency try to recover your debt will work, only to have to start all over again with litigation if it doesn’t.
Time is of the essence when collecting debts, so don’t hesitate to seek legal assistance.