Collecting funds from an unpaid account can be a complex process. You may find yourself trying to contact the debtor and asking for money repeatedly, only to get disappointed later. When you cannot collect your payments independently, you may find switching to debt-collection attorneys or agencies helpful. Regardless of whichever option you choose, you should know the differences between the two.
Collection attorneys and agencies both have negative stigmas associated with them. But the truth is that an attorney or an agency can help you recover the amount faster so you can finally stop worrying about one thing. To know the differences between the two services, speak to a collection lawyer in New York today.
How do debt collection agencies work?
Debt collection agencies are often the obvious choice for many people who are trying to collect money from someone. These agencies, particularly those in the market for over a decade, are usually equipped with specialized phone systems, computers, and software that help simplify the process and make the money-recovering easier and quicker.
When it comes to debt collection agencies, you do not need to worry about paying them. Most of these companies based in the United States work on a contingency fee basis, meaning you do not have to pay them unless they recover the amount for you. Most of them collect debts for a fee or percentage of the total amount owed.
How do debt collection attorneys work?
Debt collection attorneys, on the other hand, have a number of legal remedies available at their feet that they can pursue if the debtor does not pay. Debt collection attorneys do not do the annoying work, such as making repeated phone calls, and they also do not report the debtor’s non-repayment or late payments to the credit bureau. Instead, they may take the following steps:
- Send a threatening demand letter to the debtor.
- File a lawsuit against the debtor upon non-repayment.
- Obtain and enforce the money judgment.
Debt collection attorneys also help the two parties, the debtor and the creditor, reach a payment agreement that suits both of their interests. For example, if the debtor cannot pay the full amount at once, an attorney can suggest the best installment plan. An attorney can also do the paperwork for you and create a contract outlining the terms of the payment plan.
Debt collection attorneys also charge a percentage of the total amount owed or have an hourly rate.