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Getting Your Dues Using National Collection Agencies
By Siddarth Nagaraj on April 25, 2011

young-business-by-penny-mathews-(1).jpgWorking with collection agencies is never pleasant. Their involvement in debt extraction creates tremendous aggravation and pressure for both creditors and debtors. The former must pay these third parties for their services, which often involve tenaciously harassing those who are already in debt. The latter bears the brunt of this onslaught, which makes the process of debt repayment all the more uncomfortable. Nonetheless, it can be extremely difficult for creditors to use gentler alternative methods of debt collection, especially when they are faced with clients who are difficult to track down or are attempting to avoid due payment. If you are a creditor and you choose to employ a collection agency despite the negative implications associated with such an institution, you should know what qualities to look for in selecting the right group and how to avoid debt collectors whose services will inflict further unnecessary pain upon your clients, causing you additional trouble.
The process of extracting money from recalcitrant debtors is not an easy one; it often involves extensive repeated phone calls, emails, letters and meetings to resolve problems surrounding repayment. Debt collection agencies serve as third parties which perform these functions in exchange for a fee. Agencies range in form depending upon the size of debt their services will handle through their network, which consists of phone and computer systems that monitor repayment schedule and debtor status in order to contact the delinquent client in question when they fail to pay on time. This system of management has caused sharp criticism of agencies over the years as debt collectors have become increasingly perceived as third-party individuals who reap profit by placing additional strain upon those who already face immense pressure as they try to lift themselves out of debt. For this reason, it is of the utmost importance that you consider whether it is really necessary for you to hire the services of a collection agency that could cause your clients significant pain.

Another noteworthy concern when contemplating debt collection agencies is the extent of their fees. Most debt collectors will demand a minimum 25-30% commission for their services. Some charge even more exorbitant rates, extending up to 50% of recovered payment. An alternative third party agent you could hire in the debt collection process is an attorney, although comparisons of cost and efficiency are complex. It is more advisable to hire an attorney if the debt in question merits legal action, but their payment does not the additional lawsuit charges and court-related fees that you will owe them. In contrast, collection agencies are typically cheaper than lawyers depending upon the speed with which they are able to extract full payment; the longer it takes them to recover debt, the higher the cost you will pay.

While collection agencies operate at a variety of levels, it is advisable to use national collection agencies when you are handling debtors or assets that are spread across multiple states. Given that different debt laws and licensing requirements exist in each of the 50 states, it is a good idea that your debt collector be licensed to operate in multiple states. The Commercial Law League of America maintains a database of debt collection agencies and lawyers nationwide. National collection agencies also have a much broader array of resources that are available you when you employ their services, although you will need to pay a higher fee. Delinquent debtors often either move about or have uncertain address status, so hiring an agency which has multiple local offices nationwide can make it easier to locate and contact clients who owe you payment.

Debt collection agencies at all levels are difficult to work with as they cause discomfort for both creditors and debtors. Bear in mind before you decide to employ one that each agency will aggressively target the debtor in question. If you are certain that a national collection agency will provide the appropriate services for you, then hire one but be prudent.
Image courtesy of Penny Mathews
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