While collection agencies can’t sue your customer, they can sometimes be a good alternative to a collection lawyer. This article will discuss some situations, not involving litigation, where an agency may be better for collecting accounts receivable.
A Collection Agency May Be Better For Small Balance Cases
Small balances may be prohibitive for lawyers when there isn’t enough profit to litigate them. Yet many agencies auto-generate their calls and demand letters, and make their money through volume. As a result, many collection agencies accept small cases that lawyers decline, and may even charge lower rates.
A Collection Agency May Be Better When You’re Not Suing
In addition, a collection agency can be a good option where you think a suit is unnecessary and the customer just needs some prodding. Since you don’t need a lawyer there, you might as well save money if an agency will charge less.
But that comes with a caveat. If the prodding doesn’t work and you need to sue, the agency will normally choose an attorney and mark up its rates. In that case, hiring your own lawyer at the beginning would save time and possibly money, and you and the lawyer would have a direct relationship.
For small balances and non-litigation matters, a collection agency may be a good, cost-effective alternative to hiring a collection lawyer. Yet where litigation remains possible, hiring a lawyer directly cuts out the middleman, saves time, and ensures a direct relationship with a lawyer of your choosing.
For more information on collection agencies and collection lawyers, or if you’d like to discuss a specific collection issue, call me at 856-667-1669 or contact me here.
This material is for informational purposes only and should not be construed as legal advice. No person should rely on this information without seeking the advice of an attorney.