Debt Collecting Q & A – Issue #14

Dear Jim –

We're having real problems in collecting from a couple of our larger accounts and are therefore considering turning the job over to a collections agency. However, I'm wondering it the next step in this process should be to call in a lawyer. What do you think?

Robert Brunns,
Youngstown, OH

Dear Robert:

There are attorneys specialize in collections and their methods could work for you – simply because the letters they send to debtors have the imprimatur of a law firm. But, on the average, lawyers are not particularly skilled in the collections field.

A collections agency should be called on only as a last resort. It's much cheaper if your firm can do its own collections, even if you run into some particularly rough customers from time to time. An agency is more likely to know how to go about getting an involuntary payment out of a debtor once a judgment has been issued. For instance, an agency has a skip tracing department that has contracts in such places as banks, phone companies and other information sources and can also use information from a credit file to affect a wage garnishment. Or they can find out from the bank how much money is in a checking or saving account because, once a judgment has been issued by the court, anything over $1,000 in such an account can simply be garnisheed.

If you decide to turn those extra difficult accounts over to an agency, don't wait too long to do so. The older an account gets the harder it is to collect. People move on, change employers or another collector gets to the debtor first leaving you with the leftovers. Steps should be taken about a delinquency within 90 days of it reaching that stage.