Debt collection agencies versus Lawyers

Debt collectors get paid when they collect money for the client and only when they collect.  They will usually work hard in negotiating with the debtor and attempt to reach a settlement before resorting to any legal action.  Agencies work fast and phone at odd hours and will try anything legal to collect the outstanding amount.  A substantial amount of attention will be spent on whether it is possible to collect the debt and in certain cases determine whether the debtor has any available assets, if necessary.  Communication remains as simple as possible in order for the debtor to understand all aspects of the collection process.  If a lawyer is appointed, you will need to pay for the legal service, as well as paying a commission to the debt collection agency hired.  Agencies can be extremely effective against “professional debtors” and missing persons can be traced as well.  Furthermore, there is a keen interest in collecting debt and in all processes related to it.

Lawyers, on the other hand, get paid as they go, usually in advance.  This is a paid service irrespective of the results.  Lawyers get stuck right into the legal process with minimal negotiations, if any, and may work fast, but for some reason rarely give that impression.  The only pressure used on the debtor is to have the matter pursued in the courts and their efforts might appear sluggish.  No attempt will be made to establish whether the debtor has any other assets to settle the debt.  All the processes will also be explained using jargon or not explained at all.  Yet they are not quite effective against “professional debtors” as locating debtors is not their business.  There is generally no interest in the debt collection process at all.

Many organizations would opt for a debt collection service initially depending on how unemotional or selective you want this process to be.  However, lawyers are usually used as a “shock tactic” when they are asked to send the debtor a letter of demand.  The idea would be to startle the debtor into paying.  This sometimes works.

During the initial communication, the lawyer will not insist on knowing what the matter is about and this letter is not free.  Ensure that you know how much it is going to cost and weigh that against the size of the debt.  Also consider the psychology of the debtor.  For example: Is he used to receiving letters like this?  Will he just shrug?

Once this technique is used regularly a bulk rate will probably be introduced.  However, the success rate of these lawyer’s letters are not too high and further legal action would be required incurring more costs.

Your approach to your outstanding debt is hugely dependant on the goals and resources of the organization as well as the size of the debt to be collected.  This ultimately means that there would be incidents when you should initially approach a legal solution but if long term feasibility becomes a primary objective debt collection would yield more benefits.