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Top Reasons Debt Collection Attorneys Are More Successful Than Collection Agencies
As a business owner, it’s stressful when you have open invoices that aren’t being paid by your customers. It can hinder your ability to successfully pay your vendors and end up giving you a bad reputation in your industry with suppliers. With the help of a collection attorney, you can start collecting on those bills that are owed to you now.
Who Are Debt Collection Agencies?
These agencies are independent businesses who’s operation is focused around the debt collection process. They can be hired by businesses like you to collect the outstanding debt from your existing customers. These agencies will use automated phone systems and advanced computer systems to urge the debtor to pay off their debt. If the borrower pays off the debt, the collection agency will take a fee out of the payment.
Who Are Debt Collection Attorneys?
These are board-certified attorneys who specialize in the debt collection field. They will use the power of legal action to contact debtors to collection what’s owed to your business. Attorneys are capable of filing suit against the offending party and have expert knowledge in the legal end of the debt collection process. Attorneys will typically charge a contingency fee per case they take on.
Understanding The Difference
Now, you should have a clearer idea of what the differences are between collection agencies and debt collection attorneys. The major difference that is regularly identified is that the debt collection agency cannot sue the borrower. However, the debt collection attorney can.
Debt collection agencies can work to file negative credit information on the borrower’s credit report. They can make phone calls, deliver letters, and be consistent in prompting the borrower to pay their debts. However, debt collection agencies are unable to express that they will sue the borrower in the future upon failed payment. This makes escalating the importance of the debt difficult for the debt collection agency. Borrowers tend to balk-off their requests for payment.
Debt collection attorneys, on the other hand, can include the threat of legal action against the borrower alongside their traditional debt collection practices. In the event that traditional debt collection practices don’t work, your Massachusetts debt collection attorney can file suit for collection of the funds. They can receive judgments to garnish wages or take profit from a business’s income for repayment of the debt. In addition, a lawyer will be more knowledgeable in the process of Massachusetts debt collection so that your collection practices are legally performed.
Benefits Of Using A Debt Collection Attorney
Now, since you understand the difference between an attorney and agency as well as what debt collection practices they can perform, it’s time to look at the benefits of using a collection attorney. When you’re a business owner, you can rely on getting these benefits each and every time you refer a collections case to a debt collection attorney in your area.
- They Can File A Lawsuit – With a debt collection attorney on your side, they can immediately file a lawsuit when a borrower won’t respond to letters and calls. Typically, this step will be enough to evoke a response from the borrower to handle the debt that is owed.
- They’re More Likely To Get A Response From The Borrower – It’s no surprise that many borrowers will simply ignore the phone calls and letters from debt collection agencies. However, when a debt collection lawyer files suit against the borrower, they tend to respond quickly. Most will pay off the entirety of the debt, instead of just some when dealing with a debt collection agency.
- Settle The Debt Much Quicker – As you learned, debt collection agencies can only make phone calls and send out letters. They can’t force a borrower to pay. A debt collection attorney can file suit against the borrower for the money owed. This typically allows them to get a response from the debtor and they’re capable of settling the debt much quicker than the traditional collection agencies.
- They Have Legal Knowledge – Collection agencies are not trained in the legal field since they can’t take any legal action against the debtor. Lawyers, on the other hand, are highly trained in the legal field. They know what your business can and cannot do to collect the debt that is owed to them. This makes a huge difference to ensure that your business is acting legally to collect the debt so future settlements are capable of happening without rejection.
The Cost Debate Between A Collection Agency And A Collection Attorney
One of the biggest misconceptions out there about the debt collection process is that debt collection attorneys tend to be more expensive than the debt collection agencies. While there is some initial truth to this statement, one must take the bigger picture into account in order to realize the true cost of debt collection. By understanding how each collector bills your business, you’ll be better able to make a decision on who to hire.
Debt collectors work by charging a flat fee or percentage of the debt amount that they’re able to settle with the consumer. Many times, they end up settling the debt for less money than what your business is actually owed. In the event that the debt collection agency is unable to get payment from the borrower, they will still charge a fee for working on the debt. These costs can add up, especially if the collection agency is unable to get your payment for the debt that’s owed to you.
Debt collection attorneys work differently. They will typically charge a contingency fee which can only be collected upon payment of the debt. This means you only have to pay the lawyer for their services in the event that they get money from the borrower. In addition, lawyers are more likely to get a higher payment amount from the borrower due to their aggressive collection efforts as compared to a debt collection agency.