When asked, most people know what a collection agency is. But, in some cases, a creditor will choose to hire a collection attorney. It is a matter of a creditor’s preference when collecting money owed from debtors.
A business debt collection attorney represents a wide range of industries, including – banks, medical providers, construction companies, and more. A debt collection agency represents the same type of clients. It is why it is up to the creditor must weigh the pros and cons of both.
Debt Collection Agency vs. Business Debt Collection Attorney
When businesses do not collect money upfront for products and services rendered, some clients do not pay their bills when they come due. A company has several options. They can handle it themselves, send a letter, hire a debt collection agency, or hire a business debt collection attorney to recover the money owed.
Debt Collection Agencies
The first thing to do is explain why a credit agency and a collection attorney are different. Many people are not aware that the two solutions exist.
Debt collectors possess an infrastructure built mainly to collect a debt. Phone systems, computer software, and automated services make them an easy choice for some businesses.
Many debt collection agencies work on a third party basis for companies wanting to collect a debt. A fee or percentage of the amount owed is how collection agencies make money.
One of the factors to consider is the range of a collection agency. For example, some are local, while others handle nationwide business. A small business might rely on a local agency because it best suits their needs.
Business Debt Collection Attorney
Specific types of lawyers specialize in debt collection. In many cases, it is more cost-efficient to use a business debt collection attorney when considering legal action against a debtor. The charge for their services ranges from an hourly fee to a percentage of the monies collected.
If there is a lawsuit, separate court fees, and attorney costs may apply. Unless there is a legal action, it might be best to outsource collection to a debt collection agency.
Most of the time, business debt collection attorneys come into play after a company goes through a collection agency first, and legal action is the next step.
The Benefits of Working with a Law Firm to Collect Debt
Collection agencies cannot sue debtors. The Fair Debt Collection Practices Act (FDCPA) keeps debt collection agencies from pretending to be a law office. They are prohibited from even acting as if an attorney is on staff.
When it comes to collecting debt, knowing the law is essential. Because collection agencies cannot give legal advice, an attorney can help with the pros and cons of moving forward with financial recovery.
The freedom to file a lawsuit is a good reason to hire a business debt collection attorney. A law firm has the power to do more than write letters and take initial steps towards the collection. They have leverage that agencies do not have. Remedies such as garnishments, liens, and attachments are a few options for collecting a debt after a court makes a judgment.
Collection lawyers are not only useful for the legal side of collecting a debt. They can process it like a collection agency, but with an added layer of protection. Knowledge of the law gives them avenues for recovering debt that agencies simply do not have.
Even more than that, attorneys are held at a higher standard. They are bonded, insured, and licensed through their state. It also means that they are strictly monitored and regulated. Most credit collection agencies do not have these consumer protections.
Which Option is the Best for You?
Debt collection is not what anyone wants. But, the fact is that not everyone will pay their bills, and the financial loss can stack up.
The decision to collect debts and how to go about it is strictly up to the creditor. If some cases, businesses choose both business debt collection attorneys and a collection agency.
It is about weighing what best suits a business. Size, location, and procedures decipher how one goes about collecting the debt. Some companies even choose to keep it all in-house unless they run out of means to recover the monies.
In conclusion, there is no wrong way or right away to approach financial recovery. Debt affects a business’s bottom line.
However, before making a decision, delve into a bit of research. The Commercial Law League of America is an excellent place to start. It checks a database for certifications when it comes to legal experts and collection agencies.
Collecting debt efficiently is about having the right team with the proper certifications and experience, regardless of the avenue taken.