Recovery of a Business Debt: Collection Attorney vs. Collection Agency?
In today’s fast paced business environment and tough economy, it is more important than ever to ensure that your company is paid for goods or services provided. That’s why it is essential that every business understand the differences, limitations & benefits between using a collection agency or a collection attorney. It’s critical to realize how choosing one over the other can impact company resources, ability to use the legal system, your bottom line.
Collection Agency
A collection agency only has a limited number of tools available to collect on their client’s behalf. They do not have the ability to use the legal system to aid in collecting a valid debt owed. Therefore, only two real options exist for a collections agency to recover a debt on behalf of their client.
First, a collection agency may send letters on behalf of the creditor client in an attempt to collect a business debt. Second, a collection agency may make phone calls on behalf of their creditor client to the debtor in an attempt to collect a business debt. Since these are the only two legal options for a collection agency to use while attempting to collect a debt, the debtor may choose to ignore both the letters and the phone calls. Therefore, the tools that a collection agency can use to collect a business debt allow the creditor to control the collection procedure.
Collection Attorney
Using a skilled collection attorney has numerous advantages over using a collection agency. Like a collection agency, an attorney has the options of drafting a letter to demand payment and calling the debtor directly, however in addition to those, an attorney has many more options that can be utilized to force a debtor to deal with his creditor. The simple threat of a lawsuit, which only attorneys have the ability to threaten, can force the debtor into voluntarily settling the debt without actually having to file an actual lawsuit. If the debtor ignores the letters, phone calls, and the threat of a lawsuit, then the skilled attorney has the ability to file a lawsuit and obtain a judgment. Once a judgment has been obtained, the attorney has numerous tools to use to identify assets and then collect monies owed from a debtor.
The most common ways skilled collection attorneys can collect from a debtor would be to garnish company bank accounts, force a sheriff sale on company assets, and attach liens on items that are allowable under the law, such as a debtors accounts receivables from their own clients. None of these tools are available to collection agencies. Having the ability to use these tools to collect a debt may be enough leverage to settle the debt without having to go through these procedures simply because these collection actions may involve notifying the debtors customers. Most debtors do not want their customers to know that they do not pay their creditors. Therefore, these tools can be a very effective way to collect a debt.