Debt Recovery

The most basic premise of business is that it needs to get paid for the products or services they provide. Most of the time, this is not a problem and customers pay either before the transaction is finished or shortly after.

However, there are occasions when bills are not paid on time or at all. In these cases, businesses have two options. They can pursue the debt themselves, which takes time and more money they may not have or want to spend, or they can turn it over to a debt collection agency. In this case, one of the most important things for a business to consider is selecting an ethical debt collection agency. If not, it can lead to the debt not being collected or, worse, legal issues for the company. Here are the reasons why it is so vital to select an ethical debt collection agency.

Why Ethical Debt Collection is Important

The biggest reason that selecting an ethical debt collection agency is so important is that, like any other vendor you work with in business, they are a reflection of you and your company. A rude debt collector may not only ruin your own company’s reputation, but after a rude conversation, most debtors would become adamant and angry and would not even pay even if they had the means to clear the bill. Highest performing debt collectors get results by working amicably with debtors, not against them. Harassing a debtor is against Federal laws anyway (FDCPA Laws).

Online reputation. In 2020, the internet makes business incredibly transparent and connected. If someone is the victim of unethical debt collection practices, there is a good chance they will put that online (Google or Yelp reviews). This can severely damage the reputation of your business and become one of the first things people see when they Google your company. Remember, the debt collector is collecting a debt incurred with your company. This means that if people get upset about the practice and decide to write about it online, they will most likely mention your company instead of putting the blame squarely on the debt collector.

Ruining relationships. The other thing to consider is the long-term health of your business. Just because a customer falls into debt and must be turned over to a debt collector does not mean they will never be able to be your client again. Chances are, you have already spent time and money developing a relationship with that client. If you turn them over to an unethical debt collector, all that investment will go out the window. If/when the customer gets over whatever issue is preventing payment, they may become a valuable customer again. Even when pursuing a debt, burning bridges in business is never a good idea.

Business ethics. While every business has a different tolerance for moral and ethical issues, no business wants to be seen as being completely unethical. This will not only hurt your reputation with consumers but can also affect your company in other areas. Vendors may be less likely to want to work with companies that are believed to be unethical. A company with this reputation may also have a hard time keeping or attracting new employees.

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Federal Debt Collection Regulations

All debt collectors are subject to the Consumer Credit Protection Act and the Fair Debt Collection Practices Act. The former was established by the federal government in 1968 and the latter was created in 1977 as an amendment to the Consumer Credit Protection Act and has been amended multiple times since. The Fair Debt Collection Practices Act ( or FDCPA) speaks specifically to what debt collectors must do and may not do while pursuing a debt.

The law states that the following when trying to collect a debt with a consumer:

• Identify themselves and notify the consumer
• Give the name and address of the original creditor
• Notify the consumer of their right to dispute the debt
• Provide verification of the debt
• File a lawsuit in a proper venue

In addition to having to follow these regulations, the Act also lays out multiple practices that are not acceptable or specific regulations that must be followed. These include:

• Only making contact during specified hours
• Must cease communication upon request
• Cannot engage in excessive or abusive conversations or telephone calls
• Cannot call consumers at work
• Cannot contact a consumer if you know they have retained an attorney
• Cannot communicate with the consumer after the request for validation has been made
• Cannot misrepresent yourself or deceive the consumer
• Cannot publish the consumer’s name or address
• Cannot seek unjustified amounts
• Cannot threaten arrest or legal action
• Cannot use abusive or profane language
• Cannot reveal or discuss the debt with a third party
• Cannot contact using embarrassing media
• Cannot report false information on a credit report

How to Choose an Ethical Debt Collection Agency

There are over 5,000 debt collecting companies in the United States alone. With any industry this large, there are bound to be some great companies, some very bad ones and many that are somewhere in between. So, how do you find an ethical debt collection company among the thousands available?

Read the reviews. Just like people will look online for information about your company’s reputation and service before doing business with you, you should do the same when looking for a debt collection company. Sites like Trustpilot or ConsumerAffairs compile reviews from around the internet and put them in one place to make it easy to gather information.

Look for accreditation. Some organizations vet companies’ ethics, standards, and practices as well. The Better Business Bureau (BBB) gives companies ratings ranging from A+ to F based on the number of complaints filed, transparency, time in business, and more. They even give their seal of approval to the best companies in each industry.

Ask questions. Once you understand the federal and state requirements for debt collection in your area, it is fair to ask questions about the company you are considering working with. Ask about their philosophy, how they go about their business, and how they handle disputes. Remember, they will be an extension of your company, so you want to vet them thoroughly.

Conclusion 

Collecting debt from customers is never a pleasant process, but it is a necessity in business. If done ethically, it does not have to be a terrible experience for you or the customer in debt. When you select an ethical debt collection company, you will protect your business’ reputation, recover the debts that are owed, and maybe even be able to hold on to customers even after the process is complete.

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Schools often provide lunch to students, sometimes at a subsidized cost or free for low-income families. However, not all students qualify for free or reduced-cost lunches, and some families do not keep up with the payments. This can lead to unpaid school lunch fees, accumulating over time. Schools may take various measures to collect the debt, including involving collection agencies. School debt collections are always done amicably.

Serving Schools Nationwide Cost-effective recovery of unpaid student lunches: Contact us We understand that schools are tight on budget.

Families nationwide struggle with paying for their children’s lunches, and so do schools. The Healthy Hunger-Free-Kids Act of 2010 looked at school meal debt and required districts to devise a plan for unpaid meal fees. Still, there aren’t any standards at the federal level for what states or districts have to put in their policies, and there aren’t any basic protections for children or families.

Schools have resorted to identifying students who can’t pay for their meals at school with wristbands or hand stamps or publishing lists of students who haven’t paid to get the unpaid fees.

One district in Rhode Island stopped offering cheese sandwiches just to kids with lunch debt and began offering sunflower seed butter and jelly sandwiches as those were available to all students to tone down the lunch shaming. Some older students couldn’t go on field trips or participate in dances or other activities if they owed money. One district in Pennsylvania sent letters to parents of 1,000 students that said the parents could have to go to delinquency court and that their children could be placed in foster care. Despite lunch shaming efforts, schools are still wallowing in debt because students can’t or don’t pay for their lunches. Most parents view Lunch shaming as unethical and is not the best way to recover money.

What is the Problem for Schools?

The reasons parents don’t pay for their children’s lunches vary significantly from not being able to not qualify for the free and reduced lunch program but still struggling to feed their children or perhaps just forgetting to pay. Still, these reasons stack up financially for schools, and they end up with significant debt.

The federal government requires schools to find a way to get unpaid balances paid, but it doesn’t specify how. This caused more lunch shaming issues to pop up when the requirement was made before the 2017-2018 school year. Schools are under a lot of pressure to handle their school meal programs themselves, and over 75 percent of the schools in the National School Lunch Program had some meal debt during the 2016-2017 school year.

Schools don’t always take advantage of the federal free and reduced lunch program. Each school has a different reimbursement rate depending on its poverty level. If a school has lower reimbursement rates, it may offer free meals to students at two times above the federal poverty level, which is an annual income of $50,000 for a family of four.

A superintendent of schools in Oregon, Tim Sweeney, oversees schools in the state’s poor South Coast, and his district is in the red because it feeds all of the district’s students. For his district, it costs about $25,000 a year to do this, money which he said could be spent on textbooks. Schools in Warwick, Rhode Island, had a debt of $77,000, and $12,000 of that was owed by families who qualified for free lunches, but their charges happened before their applications were approved.

One problem is that the United States Department of Agriculture has suggested a new rule that can change how states determine who qualifies for the Supplemental Nutrition Assistance Program (SNAP) program, which helps low-income people with monthly money for food purchases. Children make up 44 percent of SNAP beneficiaries. This rule change could affect students who are automatically eligible for the free and reduced lunch program if they are in a SNAP household. Should enough students at a certain school not qualify for SNAP, the school would no longer be able to participate in the free and reduced lunch program, which could further increase their meal debt.

What Can Be Done?

Community Eligibility Provision

The federal Community Eligibility Provision empowers schools in high-poverty areas to give meals to students at no charge, and this gets rid of school meal debt and ends the shaming of students. This program also reduces the paperwork families and schools must go through for school meal applications. In the 2018 to 2019 school year, about 28,500 schools took part in the program, but many eligible schools have not opted. Between the 2017-2018 and 2018-2019 school years, participation in the program increased by 14 percent. The number of children participating is around 13.6 million nationwide, but expanding participation in this program can cut down on school meal debt.

Tax Increases

Chicago, Dallas, and New York City are large cities that offer free breakfast and lunch to all students, and Oregon is one state expanding its free and reduced lunch program to all students throughout the entire state. The state is doing this with a school tax package and it includes a $1 billion annual investment to up student performance and will be accomplished with a half percent business tax increase. The program will help ensure that over 60 percent of the 580,000 public school students in the state are included. In this program, children from families with annual incomes of up to three times the federal poverty level, which is $75,000 for a family of four, could eat for free at school.

Debt Collection

Cranston, Maine is another place with a lot of lunch debt in the school systems. That district had a debt of about $90,000 and began working with a debt collector to get the money paid. Families’ credit scores aren’t affected, but it helps to put pressure on families to pay. Some school collection agencies can send 3 collection letters for $6, which we believe is a steal and an amicable way to recover the debt.

Campaign Hard to Get Families Approved for Free and Reduced Lunch Early in the School Year

Many families that could qualify for the free and reduced lunch program are not signing up. Schools can ratchet up their efforts to get families that qualify enrolled. As previously mentioned, $12,000 of a $77,000 school lunch debt in Warwick, Rhode Island was attributable to students whose lunch charges occurred as their applications for free and reduced lunch were being processed.

Make Meal Applications Accessible

Eligibility misunderstandings, language barriers, and not wanting to share data may make households not want to fill out and turn in applications for free or reduced meals. All districts should make the application available in all languages represented in the district, and using web-based applications can also be an option to increase convenience for some families. Families should also be reminded to fill out applications any time during the year.

Increase Direct Certification

Students in SNAP, TANF, FDPRI, and Medicaid (in some states) can automatically qualify without needing an application. Students who are homeless, migrant, in foster care and Head Start also qualify without an application. Enrolling all children in the household of one qualifying student can also cut down on debt.

Help Families Apply for SNAP

Parents with more information about SNAP may be more likely to participate in the program. Providing information to parents about SNAP benefits and helping them to apply can bring more families into the SNAP program, thus making them eligible for free and reduced lunches.

Increase Communication

Schools can better keep families posted about meal account balances with texts and emails when a student’s debt begins to accrue. This can be done even when balances are low. When debts begin to accrue, it may mean there has been a change in household finances, and it is a good time to reach out to families to help them see if they are eligible for the free and reduced lunch program.

Get Rid of the Ability to Buy Competitive Foods.

According to the Food Research and Action Center:

Competitive foods, such as snacks and sodas, compete with the school breakfast and lunch programs and can draw money out of students’ school meal accounts. Many school districts will provide reimbursable school meal to students when they have accrued school meal debt, but limit purchasing competitive foods. School districts can arrange the cafeteria environment so that competitive foods are only accessible once a student has gone through the lunch line.

Use the Application Submission Date

Certify students for free and reduced lunches as of the date that their application was turned in, not the date the application is approved.

Carry Over

The Food Research and Action Center recommends:

At the start of a new school year, school districts can carry over a students’ eligibility for free or reduced-price school meals for up to 30 operating days or until a new eligibility determination is made, whichever comes first. School districts are required to do this for students who attended the district the previous year. USDA encourages school districts to carry over eligibility for 30 days or until a new determination is made (whichever comes first) for new students who were certified for free or reduce-price school meals by the previous district.

Charitable Contributions

Among the lunch-shaming news stories are stories of individuals making sacrifices to help pay down lunch debts at their local schools. Schools can also take the lead and do fundraisers as they do for field trips, new sports equipment, and other items they needs to pay down their debt. This could be done in several ways, resulting in creative ways to get the schools’ lunch debt under control.

States Can Take More Action

New Mexico eliminated lunch shaming and made schools enroll eligible students into the federal meal program if their parents haven’t with a new law in 2017.

Schools across the country are drowning in meal debt, and taking action at both the local and state levels could significantly reduce the debt the schools incur and end lunch shaming.

Read “Best Practices for Preventing or Reducing School Meal Debt” from the Food Research and Action Center for more ways to reduce school lunch debt.

References:

https://www.nbcnews.com/think/opinion/school-lunch-debt-lunch-shaming-problem-needs-national-solution-ncna1066461

https://www.frac.org/community-eligibility

https://www.statesmanjournal.com/story/news/education/2019/05/16/oregon-oks-largest-expansion-federal-free-lunch-program/3695534002/

https://apnews.com/21d02ce0aff444508ca427508ac1580b

https://www.cnn.com/2019/07/20/us/pennsylvania-school-lunch-debt-trnd/index.html

http://neatoday.org/2019/10/17/states-take-on-lunch-shaming/

https://www.cnn.com/2019/05/12/politics/school-lunch-shaming-children-debt/index.html

https://frac.org/research/resource-library/best-practices-preventing-reducing-school-meal-debt

Yes, a debt collector can sue a borrower/debtor in court on behalf of a creditor to recover money that has not been paid. A debt collector cannot outright threaten the borrower of legal action during the recovery process, however he can amicably explain the steps he may take if the debt is not paid off, especially if the borrower asks what steps will be taken next if the amount is not paid off.

There are several factors that play a huge role, whether or not the debt collector can go ahead to the court or not.

1)   Does the collector have sufficient documentation to prove that you indeed owe the debt and how much. Do not ignore a court notice, because if you do not go to court the judge may pass a default judgment against you. It is the borrower’s/debtor’s right to ask the debt collector for the backup documentation.

2)  Depending on which state the debtor resides in, there are laws that prevent a debt collector from suing a debtor after a certain number of years. These are called the Statute of Limitations or in other words, how old is the debt? For example in California, if a debt is more than 4 years old a debt collector cannot sue the debtor in court.

Also, there are different time limits if there was an oral contract or a written contract, or promissory note, or an open-ended debt like the credit card debt.

A debt collector can continue to attempt recovering money but he cannot do much beyond that once the Statute of Limitations ceiling hits. Therefore most debt collectors will not even attempt to recover money if a debt has crossed the Statute of Limitations.

There are many factors that can reset the age of an account, for example, if you agree to make a small payment against the debt, or sign a new contract to make the payment, then the Statute of Limitation resets. If your debt is very old, you can always ask the debt collector to check and explain to you if the Statute of Limitation has been reached or not.

3)  A debt collector will typically not sue until a debt has been over 180 days past due for medical bills and 120 days for non-medical debt. Patients get a 180-day grace period to resolve their medical debt before it shows up on their credit reports.

4)  A debt collector may attempt to add his court/lawyer fees and interest on top of the original debt owed, however it is up to the judge to approve it or not.

If you indeed get sued then do appear in the court and if you think if any of your legal right (like the FDCPA laws) is violated then fight against it.

Again: Once a debt collector sues the borrower in court, it is important for the debtor to respond to the notice or appear for the court hearings otherwise there is a high possibility that the judge may pass a default judgment in favor of the creditor/collection agency. Failing to appear in court is a huge error and can be a costly one.

Someone owed you money. You spent days, weeks, and months trying to get the debtor to pay you, but for one reason or another, all of your efforts failed to prompt payment in full. So — probably with a great deal of reluctance — you took the big step of involving the court system. Suing a debtor introduces some delay and cost to the debt collection process, but it can be an inevitable step if all other attempts to collect fall flat. If you have amounts owed to you, it may be necessary to take this step, but it is crucially important to know how to collect on any small claims judgment you may win.

A judgment is not the same thing as payment

The first step to collecting on a court judgment is to understand what a court judgment is — its purpose. For this article, we are going to focus on small claims judgments, as these can often be obtained without the involvement of an attorney (although should you have any specific legal questions about your case, you should consult with an attorney.) In many cases, a small business may obtain a judgment but not be sure of the next steps. Understanding how a judgment fits into your collection plans will help you take the next steps to eventual payment of the debt.

So, what is a judgment? A money judgment is a court order that directs the payment of an amount and provides judgment creditor rights to the winning party. It is a legal document and is generally governed by the laws of the state in which the judgment is obtained. For example, if you win a money judgment in New York City small claims court, the enforcement of the judgment (which is a legal term for the activities and process of getting paid) will have to abide by New York State rules. This is just in most cases, as collection of the amount due may also have to consider where the debtor lives and how to enforce the judgment in their city or state, if it is not the same as where you obtained the judgment.

A judgment is not the same as a check or other commercial paper. It simply provides a creditor with a basis to pursue collection activities with the power of the court. Some first-time judgment creditors get upset when they realize that a judgment is often little more than just a piece of paper. It provides rights that are greater than if you were just collecting on an unpaid bill as it can compel the debtor and others to help you collect.

A judgment can force a debtor to communicate

A judgment does not directly compel a debtor to pay, but when used as a tool, it can provide information that will help a creditor ultimately collect. A judgment directs the debtor to pay, but if they decide to ignore it, there is no specific penalty, such as contempt of court. However, a judgment gives a creditor the power to require the debtor to answer questions, both in writing and by calling them to appear at a court conference to give answers under oath. It is common practice to send an “information subpoena” — a formal list of questions in writing — after winning a judgment. This subpoena can ask the debtor almost anything related to their financial situation and the debt. The creditor creates a list of questions, such as:

• Where do you bank?
• What is your checking account number?
• Are you employed?
• How much cash do you have?
• Do you own property, such as real estate, automobiles, or jewelry?

If the debtor ignores the questions, then the creditor can require them to appear before the court to answer the questions, and it may then lead to sanctions such as contempt of court, but this is rare.

A judgment can require others to provide information on a debtor

Creditors can also ask financial institutions and other people to answer questions about a debtor, also through an information subpoena. A common collection strategy is to send blanket information subpoenas to banks and other financial institutions in the area where the debtor lives. A creditor may already have some information on the debtor’s bank, such as from a check used for previous payment, or from a loan application. A judgment empowers a creditor to reach out to those who may have information that would help in collections.

Judgments authorize attachments to debtor property

Besides empowering creditors to collect information, a judgment also arms a creditor with the ability to collect through garnishment and other techniques. In most cases, these activities are performed by local law enforcement, such as the sheriff of the county where the debtor resides or where the debtor maintains assets such as checking accounts or property. This is where the information gained through the use of subpoena power has the most value. If you learn that a debtor has sufficient money in the bank to satisfy your judgment, you can direct the sheriff to issue a property execution against the bank account.

Similarly, if you learn that a debtor has a job, you can direct the sheriff to issue an income execution that garnishes their wages. If a debtor owns property such as a vehicle that is free and clear of any other liens such as a car loan title lien, then a creditor may also be able to force the sale of that asset. In all of these cases, the sheriff becomes the primary collector of the amounts due. They keep a portion as their fee — and amount that varies based on state law — and remit the remaining funds to the creditor.

The process of collecting on a small claims judgment can be complicated and a bit overwhelming. Success requires a high level of attention to detail, and a well-managed plan of attach that leverages all available tools to identify sources of funds and compel payment. It may well be that the judgment is uncollectable. If a debtor has no bank account or assets that are attachable, then a creditor may spend years trying to collect a small amount. While most jurisdictions allow for interest to accrue on a judgment, the difficulty of collection may encourage post-judgment settlement, such as a payment plan agreement or stipulation to accept less than the amount owed.

A professional debt collector is an invaluable resource for navigating post-judgment collections. They can assist with enforcement activities, coordinate collection, and provide advice as to the collectability of the judgment. For more information on how a professional debt collector can help you, contact us.

Oregon has its own set of laws that govern debt collection practices in addition to federal laws like the HIPAA and Fair Debt Collection Practices Act (FDCPA). Debt collectors are required to be licensed in the state of Oregon. Debt collectors in Oregon must provide a written notice, including the amount of the debt, the name of the creditor, and an explanation that the consumer has 30 days to dispute the debt.

You can select between a fixed fee service or a contingency-only service.

If a creditor has successfully sued and obtained a judgment against a debtor, Oregon law limits how much of a debtor’s wages can be garnished. The limit is generally 25% of disposable earnings or the amount by which a debtor’s weekly income exceeds 40 times the minimum wage, whichever is less. Certain types of income are exempt from garnishment, like Social Security, retirement benefits, and public assistance.

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In Oregon, there is a statute of limitations on how long a creditor has to sue a debtor to collect a debt. The statute of limitations for written contracts (like credit card agreements) is six years; for oral contracts, it’s six years. This starts from the date of the last activity or payment.

The Current State of Medical Debt in Oregon

The last thing you want to be worried about during an unexpected illness or injury is the cost of your medical bills. For those with steady jobs and good health insurance, typically, this is not a major problem. However, all too often, people have to pay thousands of dollars, drowning them in debt.

This is a very common issue for patients, but it also affects Oregon health professionals. Their focus is to treat their patients as effectively as possible, but doctors are often put in a sticky spot if their patients are not up to date on their medical bills. This is an issue throughout the United States, but in Oregon, lawmakers are taking steps to ease the strain of medical debt on patients. This is how they’re making a change and what it means for medical professionals in Oregon.

What Are the Current Rules for Collecting Medical Debt in Oregon?

As of right now, federal law prohibits debt collectors from harassing people. This means they are not allowed to contact people before 8 AM or after 9 PM. However, this law was passed in 1977, and technology has opened up a whole new world of ways to contact people. Current federal laws are being discussed to update these rules to accommodate the new technological advances. With the discussion sparked by Washington D.C., some states are taking steps to address medical debt specifically.

Oregon has a bill being discussed that would cap the amount of interest that can be charged on medical debt and requires hospitals to screen patients and let them know if they are eligible for financial assistance and insurance. This bill also requires non-profit hospitals and affiliated clinics to provide care for free for families with incomes of up to 200% of the poverty level and charge a lower amount for families earning up to 400% of the poverty level. This assistance would open doors for lower-income families that would keep people from going into debt or filing for bankruptcy due to their medical bills.

How Can Oregon Medical Professionals and Hospitals Handle Medical Debt?

All of this is incredibly promising for residents of Oregon. However, medical professionals will still have to handle medical debt for their patients in a way that preserves the trust and respect their patients expect from doctors. There are a few different ways medical professionals can do this:

1. You can discuss options for financial assistance and let your patients know what resources they might be eligible for to help with their debt.
2. You can let them know that there are payment plan options that will help them pay down their debt in manageable increments.
3. You can walk them through their bill so they understand all the charges.

By offering assistance to those who need it and being willing to discuss the charges in a way that your patient can understand, you’ll be able to address the issue of medical debt without costing you your rapport with your patients.

Once you approach a Collection Agency, they will

• Have you signup a contract after explaining all their services.
• Setup your preferences such as Mode of Payment/remittance for the amount collected ( send you a check or direct deposit in your bank account).
• Do you want accounts to be reported to Credit Bureaus or not.
• After unsuccessful contacts, should they transfer unpaid accounts to their next service automatically or not.
• Finally provide you the email and phone number of Client Support if needed.

When an unpaid debt is assigned to a Collection Agency, they will run the following checks on each account assigned (regardless of the service selected):

a) Bankruptcy Scrub: To check if the debtor has been legally discharged of his debts by a court.

b) Address Scrub ( or Skip Tracking): To find out the latest address and the phone number of the debtor.

c) Statute of Limitations check: A debtor cannot be sued in court after certain number of years. This varies from 3 to 10 years depending on which state the debtor resides. Most agencies will not attempt collections on on these time barred debts.

d) Litigious debtor check: This check is done by very few agencies, wherein they check if a debtor has a history of filing lawsuits. They either do not attempt collections on these accounts, or suggest an alternative approach.

e) Debt dispute period: Debtor has about 30 days to dispute a debt after the first contact is made by the collection agency. If a debtor indeed disputes the debt, the client/creditor must provide the statement / invoice /signed contract which proves the validity of debt so that collection activity can proceed. One should not even think of assigning an account for collections if backup documentation is not available.

Next, depending they type is service enrolled, different things can happen.

1. Collection Letters Service (Fixed Fees Service)

A creditor typically purchases accounts (for roughly $15 per account) from the collection agency. There is no other collection fees charged from the client beyond this flat-fees. Debtor pays the client/creditor directly. A collection agency will send up to 5 demand letters and verbiage of these letters start from “diplomatic/amicable” to slightly intensive with every passing letter. Verbiage can also vary depending on the industry of client (small business debt, medical debt, dental debt, bank debt or insurance debt). Client must notify the Collection Agency if a payment is received so that further demand letters are stopped.

2. Collection Calls Service (Contingency Fees)

Collection agency will typically do an “advanced” skip tracing to locate the debtor more accurately. Whatever is collected, a Collection agency keeps a percentage ( typically 35%-45%) of the money recovered. No recovery means no fees. Debt collectors will try to collect 100% of the amount due in full in “one-go” or by putting debtor in an “installment plan”. They may also report the unpaid debt to Credit Bureaus if collection efforts fail. They will call the debtor multiple times in accordance to the FDCPA debt collection laws. Good debt collectors are able to handle debtor excuses very well and know how to talk around those excuses. They are expert at the art of collecting debt, after all that is what the collectors do all day long.

3. Legal Collections ( Contingency Fees)

Typically, no more than 5% of all accounts assigned ever make it to the legal collections. A collection agency will inform  the client/creditor before transferring this account for legal collections or make this a part of your contractual agreement. They may attempt to garnish debtor’s wages, attach assets or put lien on the debtor’s house while attempting to get a favorable judgment. Collection agency may even try to add the lawyer fees on top of the amount owed, but it is up to the judge to accept it or not.

Hope this gives you a fairly good idea on how a Collection Agency works.

If you are looking for a cost-effective collection agency Contact us and we will connect you to a good one based on your requirements and industry.