Debt Recovery

Re-Energizing Your Debt Recovery: Why Low Collection Rates Mean It’s Time to Act

Watching only pennies trickle back from thousands in overdue invoices? Low recovery rates aren’t a mystery—they’re a warning sign that something in your collection pipeline is broken and needs a quick fix.

Industry Quick-Take

Typical success rate: U.S. agencies recover 20 – 30 % of the dollars placed with them—$20–$30 on every $100.
Time kills accounts: Place a balance within 90 days and recovery can double; wait a full year and odds drop below 10 %.

If your current partner lags behind even these modest benchmarks, run through the checklist below before you replace them—or confirm that you definitely should.

#	What to Ask the Agency	Why It Matters
1	Do you publish live metrics on an online collections portal?	A last-minute scramble for data means they were never tracking performance.
2	Are you running all scrubs—Change of Address, bankruptcy, litigious-debtor?	Skipping them saves pennies but can lift recovery 5–8 %.
3	Did you sell me the right tier—collection letters vs. live collection calls?	Letters shine in the first 120 days; older files need live calls and skip tracing.
4	Can I see sample letters?	Color printing and line-item charges make debtors 17 % more likely to pay.
5	Show me two call logs from high-balance files.	You should see 5–7 contact attempts in the first month.
6	What payment channels do you offer—ACH, credit-card, Western Union?	More options = 10 % higher completion.
7	Is a “Settle-in-Full” policy in place?	Accepting 80–90 % today beats 0 % next year.
8	Do you handle credit-bureau reporting in line with U.S. debt-collection laws?	Collectors can’t threaten to report, but must tell the truth when asked.

Could You Be Behind the Low Numbers?

Late placements. After twelve months, the probability of recovery sinks below 15 %.
Missing documents. Contracts, invoices or service receipts are the collector’s legal ammunition—deliver them within 48 hours of request.
Portfolio mix. A cluster of bankruptcies or skip-traced accounts drags any metric down; compare your file to industry averages before placing blame.

Real-World Example

ABC Pediatric Clinic sent $50,000 in 120-day-old co-pays to one of NexaCollect’s vetted partners and recovered $24,500 (49 %) within six months—more than double the 22 % rate they saw with their previous agency.

Ready for Better Results?

NexaCollect has already vetted agencies that post 40–55 % recovery on fresh medical and small-business debt—nearly twice the industry mean. Want an introduction? Contact us for a free, no-obligation referral.

Collection Agency Fees: What You Really Pay (and Why It Varies)

The Hard Truth: Every day an invoice sits unpaid, its recoverable value drops by roughly 0.5% to 1%. Waiting isn’t just annoying—it’s costing you profit.

While most agencies hide their pricing behind “Call for a Quote” buttons, we believe in radical transparency. Whether you need a low-cost fixed-fee reminder or aggressive litigation, you deserve to know the numbers upfront.

At a Glance: The 2026 Fee Structure (Consumer Collections)

Stop guessing. Here is how modern collection costs break down.

Service Type	Cost to You	Best For	Risk Level
Step 1: Pre-Collection	~$15 / account (Flat Fee)	< 90 days past due. Gentle reminders.	Low: You keep 100% of recovery.
Step 2: Escalation	~$15 / account (Flat Fee)	90-150 days past due. Formal demands.	Low: You keep 100% of recovery.
Step 3: Contingency	20% – 40% of amount collected	Unresponsive accounts / > 180 days.	Zero: No recovery = No fee.
Step 4: Legal Action	40% – 50% of amount collected	High-balance debtors with assets.	Med: Requires court costs + approval.

(Keep your existing detailed “Key Things to Check” section here, but add this “Trust Trigger” box right after it)

⚠️ Warning: The “Hidden Fee” Trap

Be wary of agencies offering rates below 15%. Often, they make up the difference with:

Placement Fees: Charging you just to upload a file.
Membership Dues: Annual costs regardless of performance.
Cancellation Penalties: Fines for withdrawing an account.

NexaCollect Guarantee: We have Zero placement fees, Zero annual dues, and Zero hidden onboarding costs.

The 4-Step Recovery Model (B2C & B2B)

We use a “waterfall” approach. You pay only for the level of intensity you need.

Step 1 & 2: The “100% Back to You” Phase

Cost: ~$15–$20 per account.
The ROI: If you recover just one $500 account out of 20 placements, the service pays for itself.
What happens: A structured campaign of letters, emails, and texts (where compliant) sent first in your name, then ours.
Perfect for: Medical Practices and Dental Offices wishing to preserve patient relationships.

Step 3: The “No Recovery, No Fee” Phase

When letters don’t work, professional collectors step in.

Rate: ~40% (Consumer) or 10-35% (Commercial).
Activity: Skip tracing, credit monitoring, and compliant phone negotiation.
Why it works: A third-party demand carries weight that an internal billing call does not.

Commercial (B2B) Contingency Rates

Business debts are often larger and settled by finance professionals, allowing for lower rates.

Commercial Contingency fee (Based on Account Age and Amount Assigned)
Age: If > 1 year	40%	35%	30%	25%
180 days – 1 year	35%	30%	25%	20%
90-180 days	30%	25%	20%	15%
< 90 days	25%	20%	15%	10%
Amount Assigned ->	$500- $5k	$5k- $20k	$20k- $100k	$100K +

Need a good Collection Agency? Contact us

Serving Nationwide

Frequently Asked Questions (FAQ)

1. Who pays the collection agency fees?

Typically, the creditor (you) pays the fee out of the recovered money. However, if your original contract with the debtor includes a clause covering “costs of collection,” we may be able to add our fees to the debtor’s balance (state laws permitting).

2. What is a standard contingency fee?

The industry standard for consumer debt is 33% to 50%. For commercial (B2B) debt, it ranges from 15% to 30%. Rates depend heavily on the age of the debt—older debt is harder to collect, so the fee is higher.

3. Is it worth using a collection agency for small amounts?

Yes, if you use a Fixed-Fee service (Step 1). For a flat ~$15, you can pursue small balances without giving up 40% of the total.

Why the “Cheapest” Collection Agency Often Costs You More

A lot of businesses still shop for a collection agency the way they shop for office supplies – by looking for the lowest price. That can be an expensive mistake.

Imagine you place $40,000 in unpaid accounts with two different agencies:

Agency A
- Charges a contingency fee of 20%.
- Obviously gives less time to each account. Recovers $6,000 (15% of your placements).
- Your net after fees: $4,800.
Agency B
- Charges a contingency fee of 30%.
- Charges more, but also works a lot harder on each account. Recovers $16,000 (40% of your placements).
- Your net after fees: $11,200.

Even though Agency B charges a higher fee percentage, you end up with more than double the money in your bank account.

This gap gets even larger when you add:

Fewer write-offs
Better documentation and compliance
Less time your staff spend chasing the same accounts

In today’s environment—where average agency recovery rates are often in the 20–30% range and top performers can do significantly better—the real question isn’t “Who is cheapest?” but “Who can recover the most, safely?”

Recent Results

Below are fresh, sample scenarios that reflect what a modern fee structure can look like in practice. These are illustrative only, not guaranteed outcomes.

Dental practice in Ohio – Fixed fee COMPLETE service
- $18,600 in early-stage patient balances placed under 150 days past due.
- Used Step 1 + Step 2 (~$20 per account for 220 accounts).
- Within 45 days, $10,900 was recovered directly by the practice (no contingency fee; only the flat fees paid).
HVAC contractor in Texas – B2C contingency (Step 3)
- $62,000 in residential invoices, most between 6–12 months old.
- Placed directly into Step 3 at ~40% contingency.
- Over 6 months, $34,500 collected; the contractor received roughly $20,700 after agency fees.
Wholesale distributor in California – B2B contingency
- $210,000 in past-due invoices, mostly 90–180 days with a few just over a year old.
- Fee grid ranged from 15%–30% depending on balance and age.
- Within 4 months, $88,000 recovered; net back to client after fees: approximately $69,000.
Multi-location medical group in Florida – mix of fixed fee and contingency
- $75,000 in balances under 120 days placed on COMPLETE (Steps 1+2) plus $40,000 older than 180 days on Step 3.
- Fixed-fee side: about $31,000 recovered directly to the practice.
- Contingency side: $14,400 recovered, with roughly $8,600 net to the group after Step 3 fees.
Technology services firm in New York – B2B legal placements
- Ten disputed invoices totaling $180,000, all over 1 year old.
- After non-legal efforts, select cases moved to Step 4 (legal) at ~40–50% contingency, plus court costs advanced by the client.
- Three cases produced judgments and settlements totaling $72,000, with approximately $36,000–$40,000 net back to the client after legal fees and costs.

These examples show how different fee structures (fixed vs. contingency vs. legal) can be combined to match your risk, account age, and business goals.

Offering Debt Collections Service to Clients: Lets be 100% Honest

Honesty and patience reap betters results than being pushy when trying to sell your collections service to a prospective client. Let your prospective clients ask questions about your service before you explain your collection services to them.

1. Understand all services and believe in them:

The sales process requires a deep understanding of the product/service to a level where a Sales Agent believes in the product and is 100% confident that it will benefit his clients. He should understand which service is beneficial for which type of client, make recommendations, and then let clients select the service of their choice.

Observation: Working as a Sales Representative in a Collection Agency is a very challenging career. Most agencies offer only commission-based payout and no fixed salary component. Although most Sales Reps would love to have fewer very large clients which generate hefty commissions, this never happens for most Reps. The client portfolio of most Sales Reps consists of several small clients, a handful of medium-sized clients, and no large clients. Many Reps will change their career within a couple of months because they cannot make any meaningful money. Due to this sales pressure, a small portion of Reps indulges in presenting partial-truth information about the collection agency they represent.

Being a Sales Rep for a collection agency can be rewarding, but only over a period of time, and cracking that six-figure salary/commissions barrier will take years of hard work. Here are practical and honest tips for individuals looking to make a career in this field.

2. Be honest to your prospective client:

Let me give a few examples where a Sales Rep may not be very truthful for these questions are raised by a prospective client:

Q1) What are your collection rates?
A1) Our collection rates are the highest in the industry.
( Instead, reply with some real collection percentage numbers across various phases of service. Explain to him what results in higher collection rates.)

Q2) Are all your operations located in the USA?
A2) Yes
( Even if your corporate office is located in USA, but maybe your back office IT is located in India, or your call center or support staff is located in the Philippines then you just hid the facts.)

Q3) What guarantee do you offer?
A3) If we do not recover your investment, we will refund your money.
( That’s usually not 100% true, most agencies will return only a partial amount back and withhold any commissions that have been paid out to employees/staff, or there will be additional riders. Instead, tell them that the detailed guarantee terms are mentioned in the agreement.)

Q4) In which collection phase do you recommend I should submit my accounts?
A4) Collection calls – We don’t charge you till we collect.
(Suggest what is best for the clients and not what is good for your own commissions. If the age of debt is less, then suggest a lower fee, fixed fees collection letter service, and not the collection calls which are contingency based and result in a higher cost for the client.)

Check your company’s policy to answer such questions or consult your supervisor for all such questions.

3. Be patient – don’t be pushy:

Pushing hard to seal the deal in the very first call can be a huge mistake. It may work in a few cases, but in most cases, this approach fails. Give adequate opportunity to your client to let them ask as many questions as they like, explain your services clearly, then ask for a follow-up meeting to finally close the sales. Even though many Sales Managers will disagree with this approach, based on my experience, more deals are closed if you are more patient with a client versus when you are pressurizing.

Collection Letters, Calls, or Lawsuits: Choosing the Right Move at the Right Moment

1. The clock starts ticking the day an invoice turns 30-days past due

Why speed matters: Industry analysts estimate recovery chances slip roughly one percentage point every week after the due date. By six months, even A-rated agencies collect only a third of what they could have captured in month one.
Example: A Colorado dental practice placed 40 past-due patient invoices at just 35 days late. Within six weeks, they had pocketed 31 payments—an 77 % liquidation rate. A sister clinic waited until day 120 and recovered just 24 % on a nearly identical batch.

2. The Four-Step Collection Continuum

Step	Ideal Age of Debt	Who Contacts Debtor	Typical Cost	Expected Liquidation*	Best For
Step 1 – Friendly Reminders (“Pre-Collections”)	30-45 days	Your name & branding	Flat fee ≈ $15	Up to 70 %	First-cycle delinquencies, small balances
Step 2 – Agency Letters	60-120 days	Agency letterhead	Same flat fee	50-70 %	Accounts that ignored Step 1
Step 3 – Professional Collector Calls	120 + days	Live collectors	Contingency 35-50 %	20-40 %	Higher balances, chronic non-responders
Step 4 – Legal Action	Post-Step 3 or very high balance	Attorneys	Filing costs + higher contingency	Rare—but highest dollar yield	Debts with assets to levy or liens to file

*Results vary by industry, documentation, and credit profile.

3. Step-by-Step Deep Dive with Mini-Case Studies

Step 1: Five-Touch Gentle Nudge

What happens: Five escalating letters or emails mailed under your logo. You keep every dime collected.
Mini-case: A boutique gym sent 220 members to a pre-collection letter service at 38 days late. Total flat-fee spend: $3,300. Fast-forward three weeks—$27,000 in membership dues hit their bank.

Step 2: Certified Agency Letters

Adds third-party gravitas—return address now reads “Professional Debt Collection Agency.”
Mini-case: A wholesale HVAC supplier skipped Step 1 and placed 19 invoices (avg. $1,800) at 75 days late. After two agency letters, 12 customers paid in full, 4 started payment plans, and only 3 progressed to phone collections.

Step 3: Human Calls & Negotiation

Live collectors work within the “7 calls in 7 days” rule, so persuasion—not robo-dial volume—wins.
Mini-case: An e-commerce brand escalated 600 aged orders (avg. $420) at 150 days past due. The agency’s skip-trace located 85 new cell numbers, and skilled negotiators closed $102,000 within sixty days—on a pure contingency fee.

Step 4: Litigation

Only about 2 % of files merit a lawsuit once an asset search is done.
Mini-case: A commercial landlord had a tenant default on $68,000 in rent. The agency’s attorney filed, won judgment, and garnished the tenant’s merchant-card deposits—recovering 92 % after costs.

4. Compliance & Good-Will Checkpoints

FDCPA & Reg F: Ensure dialer logic respects the “7-in-7” call cap and the model validation notice.
Data Security: Use agencies that can show SOC-2 reports or HIPAA Business Associate Agreements for medical files.
Tone Matters: In post-collection surveys, 54 % of debtors said they paid sooner because letters sounded respectful rather than threatening.

5. Quick Decision Matrix

Balance under $500 & < 45 days late? → Step 1.
Multiple reminders ignored & 60-120 days late? → Step 2.
Over 120 days OR balance > $1,000? → Step 3.
Assets located & claim > $5,000? → Ask if Step 4 pencils out.

Bottom Line

Every month you delay moves an invoice closer to the industry’s 20 % recovery gutter. Place accounts early, escalate methodically, and lean on agencies that blend fixed-fee economy with contingency muscle. Still unsure? Drop us a note—NexaCollect will match you with a vetted, fully compliant partner by tomorrow morning.

In-house Recovery vs. Collection Agency: Cost Comparison

What really saves you money, boosts recovery, and keeps you compliant?

1. Why timing matters

After two or three billing cycles (roughly 60–90 days), the odds of collecting in-house plummet. Industry data shows that every 30-day delay chops the chance of recovery by about 10 percentage points. If the account is 90 days past due, the debtor is already treating the bill as “optional,” and professional leverage becomes essential.

2. Cost showdown – letters & calls

Task	Typical In-House Cost*	Typical Agency Cost*	Why the gap exists
Five demand letters	US $80–150 (staff time, stationery, postage, software)	≈ US $15–20	Agencies batch thousands of letters, postage and print at wholesale rates.
Five follow-up calls	US $45–90 (10 min × 5 calls @ US $25/hr)	Contingency fee only if agency uses live collectors	Agencies work on “no collect, no fee” for calls; you pay from proceeds rather than upfront.

Based on Sterling Commerce’s US $30 per paper invoice study and David O. Willis’s US $16 billing estimate, updated for 2025 wage and postage averages.”
Bottom line: even before you add skip-tracing tools, credit-bureau reporting, or compliance monitoring, an agency can be 5–10× cheaper on pure operating cost.

3. Recovery rate & return on investment

Average in-house teams collect 12–15 % of dollars placed after 90 days.
The mean U.S. agency recovery rate is 20–30 %, according to ACA International surveys.
High-performing agencies routinely post 40 %+ on fresh commercial debt and 50 %+ on medical debt with accurate contact data.

Because contingency fees are usually 15–35 % of what’s collected, you still net more cash even after paying the agency.

4. Compliance—your hidden risk

Regulations (FDCPA, TCPA, HIPAA, GLBA, Reg F) carry stiff penalties—up to US $1,000 per consumer per FDCPA violation plus class-action exposure. Dedicated agencies maintain licensing, bonding, and attorney-vetted letter templates, shielding you from costly missteps.

5. Value-adds you don’t get in-house

Agency Tool	Benefit to You
Bankruptcy & deceased scrubs	Prevents wasted effort and potential legal issues.
Change-of-address, phone, & email appends	Up to 35 % more right-party contacts reached.
Credit-bureau reporting	Immediate credit-score impact motivates payment.
Skip tracing & asset searches	Locates debtors who have moved or “gone dark.”
Legal escalation network	One-stop access to collection attorneys in all 50 states.

6. Opportunity cost & focus

Every hour your staff chases debts is an hour they aren’t scheduling new patients, writing code, or closing sales. Outsourcing lets you redeploy talent to revenue-producing work, while the agency—built for scale—handles the grind.

7. Customer relationships

Modern agencies use consumer-friendly scripting and digital payment portals. Many debtors actually prefer a neutral third party over direct confrontation with your staff; it removes emotion and clarifies next steps.

8. When to flip the switch

If an account is 30–120 days overdue and your reminders are going unanswered, assign it to a collection agency that starts with first-party (“soft”) letters, then escalates to third-party demands and professional calls. Waiting longer only shrinks the pot you can recover.

Take-away

A reputable collection agency isn’t an expense—it’s a profit multiplier that lowers operating costs, lifts net recovery percentages, and guards against compliance landmines. That’s why banks, hospitals, utilities, and even the U.S. government outsource billions in delinquent accounts every year. If it works for them, it can work for you—starting as low as US $15 per account.

Ready to compare agencies? NexaCollect’s free matching tool can connect you with licensed, high-performing partners in minutes.

How to make a Perfect Collection Call?

According to the annual CFPB 2017 report, there were 130,000 people employed by 6,000 collection agencies in the “13.7 billion dollar industry”. Although the base salary of a debt collector is low (or none), he (or she) can earn a lot in commissions based on the amount of debt he collects. In this article, we assume that the reader of this article (you) is a debt collector.

Related article: Top debtor excuses and how to handle them

This is a fairly long and comprehensive article. We have attempted to make it as informative as possible.

Best case scenario:
Some individuals did not pay because they simply did not realize the seriousness of not paying the bill till they heard from a debt collector, or they had simply forgotten to clear the dues. This happens more often than you would think. Lucky for you, such cases can often be cleared amicably in a single call.

1. Prerequisites

a) Prepare your mind:
Before making a collections call, ensure you are fully relaxed, regardless of how bad your last collections call was. Tell yourself, “I will remain calm during this call, no matter what“. Let’s agree that a collections call from a debt collector is the last thing anyone wants to receive on any given day. About half of the debtors (or less) will talk to you properly, others will give you excuses, and some may even be nasty or abusive. Do not let any of this impact you. It’s a part of your job. Laugh it off after the call is over. The debtors need to understand that you are calling to work with them, not against them.

No checking Facebook, WhatsApp, Instagram, News or Sports during the call. Keep your cell phone aside and avoid surfing the internet. Stay focused and Listen carefully.

b) Yes, some debtors owe nothing. Your data could be incorrect or outdated:
Accept it, there is a possibility that the debtor might have already paid the debt, just that you are unaware of it or your corporate system is not up to date. In such cases, take whatever payment proof the debtor can provide and end the call nicely. Get the payment proof validated.

Collection calls are commission-based. The collection agency gets paid only when the debtor makes a payment. The debtors are ideally required to pay the collection agency directly, and then the agency remits the amount back to their clients after deducting their collection fees. Occasionally, debtors pay directly to the clients; in this case, the clients must pay the collection fees back to the agency. Your client could have just forgotten to inform you guys about this payment. Rarely, but you may come across some sneaky clients who intentionally do not tell you about the amount they have received, hoping to avoid paying your collections fees.

And lastly, it is possible that the person does not owe the debt or is protected since he is legally bankrupt. The debt could also be past the Statute of Limitations (SOL). Clarify your company’s policy when handling such accounts.

c) Inaccurate billing by clients:
Inaccurate billing and overcharging is other big complaint from debtors. This is particularly common in the insurance industry and phone and cable companies. These clients generally have no problem paying off the debt, provided the bill is fixed per their understanding. Listen to the debtor. If he sounds genuine and the difference is large, then discuss the matter with your supervisor after the call for a further course of action. At times, the debtor owes a lower amount or nothing.

d) Be Professional, Confident, and Somewhat Authoritative:

Imagine the debtor is sitting in front of you. Your attitude should be somewhat similar to a recruiter. Personally, whenever I have taken a job interview, I tend to be in my best behavior, and act professionally yet authoritatively.

Be polite, a debt collector does not have the option to get angry. He should also avoid using any “Sense of humor” during the call. Something may be funny for you but may be offensive to the debtor. It is a good practice to keep a smile on your face while making these collection calls. It helps to maintain a positive attitude. Never eat or drink during the call.

e) Compliance:

Be aware of the FDCPA laws (Fair Debt Collection Practices Act) and other applicable state laws. Never cross those limits. Other laws like HIPAA or TPCA may also apply.

f) Review all the documents that you have before the call:

Scanning the related documents once you are on the phone with the debtor will look unprofessional and unprepared. Here is some minimum information you should have before making the call.
* Exact amount owed
* What services and products were sold, and on what date?
* Date when the payment was due.
* Payment terms and any other supporting documents.
* A summary of previous communication between your client and your collection agency.
* If any payment has been made so far.
* Are you permitted to settle the debt for a lower amount?

Many debtors crosscheck the information a debt collector has about the debt to fend off the collector. But if within the first 30 seconds the debtor strongly feels that the collector must have sufficient information about the debt, he will likely not go into further details, the tide will quickly turn from interrogation to how the debtor is going to pay.

g) Maximum time for the call:
Do you want to spend the same time collecting on a debt that is $100 vs which is $1000, probably No? You do not want to spend too much of your and the company’s time on a small debt. If the collection call on a lower outstanding debt happens to go for a longer time than anticipated, and it is still unclear whether the call is going productive or not, try to get the debtor back from auxiliary discussions or end the call nicely, and possibly call the client at a later time. Try to keep your call short but effective.

2. Starting the call – First thing first:

a) Are you talking to the right person:

By law, you are not allowed to discuss collection matters with anyone other than the debtor himself (or the co-signer of the debt if the debtor is unreachable/unable to pay). This is also called the No-Third party disclosure law. Ensure that it’s the right person on the other side. Some debt collectors verify customers by checking their last four digits of SSN or address. Start your call by speaking clearly and confidently, neither too loud nor too soft.

b) If someone else picks the call:
If the person on the phone does not know the debtor, then the debtor’s contact information may have changed. You may need to do an advanced Skip Tracing to locate the debtor.

If this other person asks what you are calling about, you can simply say it’s regarding some business matter. In case it’s the debtor’s correct number, just that he is not available at the moment, you can either call at a later time or politely leave a message with your name and number and request them to pass it to the right person.

c) Landline or Cell Phone
It is always beneficial to be aware if you call on the debtor’s landline, cell phone, or work phone. FDCPA Collection laws are more strict when calling on the cell phone. In some states calling on the cell phone is prohibited by default, unless the debtor has permitted you.

d) Voicemail
You can leave a voicemail but do not mention that the call is regarding a past-due bill because if it is a shared voicemail box, then you can potentially disclose the debt to an unrelated person and violate FDCPA. Leave your name and number and request the debtor to call you back.

Good morning, my name is [ your name]. We have an important message from [company name] for [Mr. John Doe]. Please call [company’s telephone number] and mention the reference number [***xyz] when you call us back.

3. Your collection call starts now:

a) Address the debtor by his First Name, and avoid using words like “Sir / Mam / Bro/ Buddy / Sis”.

b) Tell the debtor that this is an attempt to collect a debt. Any information obtained will be used for collection purposes only. Some debt collectors record collection calls.

You must legally disclose that you are a debt collector and calling regarding an unpaid bill.

A little off the topic – These states require All-Party Consent if the call is recorded. (Washington, Pennsylvania, New Hampshire, Nevada, Montana, Michigan, Massachusetts, Maryland, Illinois, Florida and California.) This list could have changed by now, but overall your agency will make you aware of their call recording procedures and/or if you need to ask the debtor’s permission before recording the call.

c) Then you let them know who your client is, and from whom you got the actual debt ( the original creditor).

d) Make them aware that the client has legally authorized your collection agency to collect the debt on their behalf.

e) Then, immediately, ask the debtor how they would like to pay. Most collection agencies will accept payment over the phone. Get ready for all kinds of debtor excuses. Most likely, the debtor will tell you the reason for non-payment, but if they do not, ask them.

f) If you end the call without getting a payment or without a commitment to the payment date/amount, that call has been wasted.

g) Sound serious about getting the payment. If you do not show seriousness and haste, the debtor won’t get serious either.

h) You can indirectly have the debtor accept the debt by asking, “Do you have any more questions regarding this debt?”

i) If the debtor says that he will make payment at a later date, then immediately ask him it will be by Check, Credit Card over the phone, Money order, (or other options like Western Union). Most debtors reply that they will mail a check and ask which Bank/Credit Union they will use. All this will reflect how serious you are about paying the bill off. If the debtor demands a return envelope to make the payment, confirm their latest mailing address. In fact, sending a payment envelope is encouraged as an additional payment reminder.

j) If the debtors say they do not have money now, ask them when they will get their salary. Tell them to remit the following day and if they can call you to confirm when the payment has been sent. Besides asking open-ended questions to get as much information as possible from the customer. to nail down a commitment eventually.

k) Many debtors will start explaining their financial hardships, although they may be correct but do not fall for those and yet do not appear indifferent. Take a middle route – “I understand why you are feeling this way“.

l) Try to finalize the payment arrangements. If the debtor cannot pay a lump sum, then offer them to pay in installments. “To prevent you from going further into the debt, I can offer you to make payment in installments“.

m) If the debtor is unreasonably aggressive or angry, ask them, “It appears that have called you at a wrong time. When will be a good time to call you again.”

n) Take short notes, so you can recall what happened during the call. It will also help you to pinpoint if the debtor changes his story in the next call. Before the call ends, let the debtor know you have taken notes from this call. All this conveys your seriousness in collecting the debt.

o) Give a short pause after your questions, especially when you ask for the payment arrangements, and allow the debtor to speak. Short silences are a powerful tool in debt collections; they will likely spill vital information.

p) Debtors may get angry, emotional, embarrassed, and even yell at you. Remember to stay calm and focused. Over time you will get immune to all these things. But, you can never threaten a customer. Making false statements like “You can go to jail” or “We know how to get money out of people like you” is completely prohibited.

q) If the debtor is unwilling to pay at all, politely let him know the consequences of not paying the debt, including entry of this unpaid bill on his credit history.

Read your company’s policy before telling the debtor that “this account may be transferred to the legal team” is acceptable or not. If debtors feel they are about to get sued, they will also contact a lawyer making your collection efforts even harder.

r) The debtor has the right to tell you never to call him. He can also tell you to perform all collection activities in writing rather than a phone call. These are his legal rights.

s) Lastly, if the collection call is unfavorable, try to end the call rather than hanging up intelligently. This will help avoid making matters worse.

4. After the call ends:

a) Finalize/formalize your notes from the call, including dates on which the debtor has agreed to send money.

b) Most debt collectors become better over time. Do not hesitate to ask your co-workers (collectors) how they would have tackled a situation that you could not handle well during the call.

c) If you unfortunately/mistakenly violated any collection laws or yelled back on the debtor, make your supervisor aware immediately before the situation worsens. Any unfortunate/critical situation should be documented and communicated to your supervisor immediately.

d) Tell yourself to contact the debtor on the date on which you agreed to talk again or when the payment is supposed to be made. Regular follow-ups will maintain the pressure on him.

5. Debtor’s Legal rights:

a) Beware, the debtors are more aware of their legal rights than ever. There is an unlimited supply of articles and videos telling the debtor how to escape from making payments. Many of these videos provide valid information but more often than you think, these videos go overboard and end up providing misinformation. People posting these videos are often not even associated with the collections industry or lawyers. Their experience and suggestions may not fully fit with the debtor’s situation. They often arm themself with this misinformation and argue with you unnecessarily.

Even the state collection laws vary largely by state, which these videos do not discuss. Many people post these misguided videos just to make money out of advertisements, nothing else. So yes, there is pretty good information online regarding the debtor’s rights, but there is an equal amount of incomplete/misinformation out there that a debtor may not realize.

Then some lawyers make a living by filing lawsuits against the collection agencies. Many debtors are so loaded up with information (and misinformation) that they may start sounding attorneys themselves.

b) According to consumerfinance.gov, the debtor has the legal right to ask you these things:

* Identity of the debt collector, including name, address, and phone number
* The amount of the debt, including any fees such as interest or collection costs
* What the debt is for and when the debt was incurred
* The name of the original creditor
* Information about whether you or someone else may owe the debt

The debtor can also tell over the phone or send the collection agency in writing:

* I do not owe this debt.
* I need more information about this debt.
* I want the debt collector to stop contacting me.
* I want the debt collector only to contact me through my lawyer.
* I want to specify how the debt collector can contact me.
* Dispute the debt itself within 30 days of the first contact.

A debt collector needs to be flexible and handle situations smartly and diplomatically. A collections call is never easy. There is no magic wand to collect a debt.

The information presented here is not a piece of legal advice or something which fits all situations. There are way too many situations and laws beyond what has been covered above. A large portion of this article is based on my co-workers’ feedback during my last 20 years in the collections industry.

We would appreciate your feedback on this article and how to enhance it further.

References:
https://www.consumerfinance.gov/ask-cfpb/what-should-i-do-when-a-debt-collector-contacts-me-en-1695/