Why use a collection agency?

Several factors (mostly pertaining to psychology) are advantageous in relation to using a collection agency. Most times, a person in debt will cooperate with the collection agency when they have not been so cooperative with the creditor. This is because they get the sense more people are getting involved and they understand that collection agencies may effect their credit history.

What does the success rate numbers look like?

Several things must be considered in relation to recovering funds (the age of the debt is one of the most important factors). The more time that elapses, the less likely it will be that the debt will be recovered. Other variables include type of debt, documentation, balance, and industry.

How quickly can collectors get the money?

Claims are entered in collection systems immediately and the person in debt is notified soon thereafter. Follow-up phone calls will ensue along with more letters. Some debts can be collected within the first days while others may take up to years. The most successful agencies will say that the average collection takes somewhere around 90 days.

What kind of communications will I have with the collection agency?

While most companies will have your files ready to be discussed at any time, monthly reports are usually the way that the collection agencies will communicate with their clients. The monthly reports will give detail as to what calls were made, what letters were sent, how much money was collected, and how much money still needs to be collected.

What happens if the debtor refuses to pay?

Keeping detailed and accurate information is important. This information will be provided to the debtor and if they continuously refuse to pay a collection agency will go through the process of assessing whether the situation is 'suitworthy' or not; meaning that they will gauge the particular case against prior circumstances to see if it would be wise for the creditor to seek legal actions against the debtor.

Will the collection agency handle my case all the way to legal action?

It depends on the agency, but nevertheless they will have your records well documented, will be able to tell you of similar situations they have come across, and most likely will know of a lot of lawyers that handle matters such as yours.

How important is 'debt age?'

The age of delinquency is the most major factor in determining whether a debt will be paid or not. The best time to hope for and try to collect is on a debt that is 60 to 90 days old.

Will using a collection agency jeopardize future relations with existing clients?

Most people think of the collection agency as one step behind a mafia hitman, but this is not so. Often a creditor can council the agency as to how and conduct their business. Each account is approached on an individual basis and most agencies will understand that a present delinquent customer may become a great on-time customer in the near future and most will conduct your business appropriately.

What are the fees like?

The fees will vary with each agency and will be based on the age of the debt. Some agencies will charge more as the time of the debt increases. Most agencies differentiate between commercial and consumer debts and most will charge more of a fee for obtaining consumer debts. On average, the fee may be anywhere between 20 to 35% of the debt.