Hiring A Debt Lawyer vs. Collection Agency
There are four major differences between a collection law firm and a collection agency which are:
Creditor’s Primary Contact
If the creditor retains a collection agency to help him collect his debt, the creditor will be in contact with the collection agency only. In the likely event the collection agency has to retain outside counsel to collect involuntary payment, the creditor won’t have the added benefit of speaking with either his attorney or any person of the law firm that is working on their behalf.
In comparison, if the creditor retains a collection law firm, the creditor will be in consistent contact with a debt lawyer, his/her attorney and the support staff of the law firm working to collect their debt.
The Methods Used to Collect Payment That Is Voluntary
A collection agency will attempt to collect voluntary payment by calling the debtor or drafting collection letters that will be sent to the debtor. While a collection law firm will also draft collection letters to the debtor and will also call the debtor, instead of one or the other. Also, a law firm has the added benefit of drafting letters on legal letterhead and having an attorney write the letters and call the debtor, rather than a layperson call the debtor. Having an attorney contact the debtor, either on legal letterhead or over the telephone instills more fear in the debtor, which in turn makes the debtor more apt to respond.
Methods to Collect Payment That Is Involuntary
If the debtor does not reply to a collection agency, the agency has to obtain permission from the creditor to retain a law firm to start legal action. If the creditor agrees to the beginning of a suit, the agency then has to find and retain a law firm to start a lawsuit against the debtor. This takes time and will result in a pause in the creditor obtaining payment on their debt. In addition, the creditor will incur both the cost of collecting the debt from the agency as well as the firm’s legal fees.
In comparison, if a creditor retains a collection firm first, the creditor typically gives the collection firm authority to commence legal action in the retainer agreement. The collection firm can then immediately commence suit if the debtor does not respond to its efforts to collect voluntary payment. This avoids the delay of waiting for the creditor’s consent to commence suit as well as the delay in retaining counsel for the beginning of a lawsuit.
The best possible result a collection agency can have for a creditor is a legal judgment that orders the debtor to pay the debt. In the likely event the debtor fails to comply with the judgment, the collection agency is unable to use any methods to actually collect the debt owed.
In comparison, a collection firm has the methods necessary to collect payment on the judgment. For example, if the debtor does not pay the judgment, the collection law firm can either locate the debtor’s bank accounts and assets with the use of specialized computer software or hire a person to locate the debtor’s employer and garnish the debtor’s wages directly from his/her employer. This means that the debtor’s employer will pay the creditor the debtor’s wages/salary instead of paying the debtor.
Hiring a collection law firm to help collect debt will be more efficient and more cost effective with better results and will actually collect the debt owed to you.