Why do Collection Law Firms Outperform Collection Agencies?

To ask the question ‘What has a better outcome- a collection agency or a collection law firm?’ is the same as asking ‘What is better, a diner or a 5 star restaurant?’.  Both offer food, however one obviously excels over the other.  In this case, it just so happens to be the collection law firm that excels.

One of the main reasons why a collection law firm out performs a collections agency is based on the fact that collection law firms have much more legal rights.  An agency cannot perform nearly as many duties as a law firm.  

A collection agency is merely an agency.  They can make phone calls and write letters.  That is basically the extent of their legal boundaries.  If the debtor doesn’t pay, there aren’t any real consequences coming from the agency.  This is where the law firm and agency differ.  A collection law firm is able to all of the same things as an agency; however they can also file suits.  Debtors are typically much speedier in payments if they know a credit hurting suit can be filed against them.  

Also, in the long run, a collection agency can potentially cost you more money.   When a collection agency is not able to collect, which is often, they have to then turn the case over to an attorney who can file a suit.   This leads to more money being paid out by the one who is seeking a collection.  The most efficient thing to do is to just cut out the middle man (the agency) and hire the attorney in the beginning.  

It’s also important to consider the types of people that will be taking your case.  With a collection firm you are guaranteed to have educated, motivated individuals who will be able to know the full realm of your claim. A collections agency cannot grant the same expert treatment that you will receive from a collections attorney. 

With that being said, it really does depend on the size of the debt that is being collected.  While law firms stand strong on their legal ground, collection agencies have call centers, and technological features, that simply cannot be matched by a law firm.  

Skip Tracing Made Easy Through Social Media

With personal debt increasing, there are more and more employment options for skip tracers.  Skip tracers are responsible for finding missing people.  The top reason people voluntarily go missing is because of debt.  In an effort to get away from debt, the debtor will dodge the collectors by up and leaving their debt behind.

Skip tracing used to be an impossible job.  The only way to find people used to be through word of mouth.  The skip tracer would have to go to the person’s places of employment, and even occasionally search for family members to ask if they have seen the skipper.  This is no longer the case.

Finding a debt skipper is becoming much easier with the rise of the internet and social media.  By using such websites as Facebook, Twitter, and LinkedIn, skip tracers are able to get a much better idea about the whereabouts of their prospects.  These days a skip tracer’s job can be as easy as just doing a simple Google search on the debtor.  With that being said, it’s important to note that skip tracers are NOT legally permitted to contact the debtor through social media means. 

If a debtor’s Facebook profile is found, it is typically quite simple to determine their location.  There may be clues left by looking at the status they have posted.  Even if the debtor didn’t post a status specifically pointing out their location, skip tracers can also look through recent pictures to get an idea of their location. 

Facebook has also added a feature that shows the actual city that the person was in when they posted a status.  If the debtor has this feature enabled on their Facebook, it makes the job of a skip tracer all the more easier.  Luckily we are in the technology age, and with this comes the ability to easily track down those that are indebted to us.  

Is Debt Collecting Leaving You Feeling Hopeless?

Collecting is not an easy job.  This is known.  With people dodging out of the collection agencies sight, how are we expected to manage this discouragement?  There are a few things that you should take into consideration if you are experiencing a debt collecting nightmare. 

The first, and most important, thing to remember is that debt collecting takes time.  The person didn’t acquire the debt over night, so it’s impossible to expect them to pay over night.  The most frustrating part of debt collection is the initial contact that you have to reach with the person. 

People dodge debt collectors all the time, that’s why patience is key.  Debt collection is an art. We have to find a happy medium that will both motivate the one in debt to pay, while not making them feel pressured or harassed in the mean time. 

Once you are able to make that initial contact with the prospect, set out clear guidelines and expectations.  Sometimes it helps to create a flexible payment plan so that they don’t feel overwhelmed.  Remember, a person who feels completely overwhelmed and is drowning in debt is less likely to pay than someone who feels respected and understood by the collector.  By being flexible you are helping them help you.

Another thing that gives us that ‘burnt out’ feeling while collecting debt is the fact that the government just isn’t on our side.  Most of the rules and regulations are against us, and at times it can feel like it’s impossible to collect.  Don’t get discouraged by the regulations against you.  Do all that you can that is within the law, and don’t give up on your money.  The money will eventually come as long as there is a healthy mixture of patience and perseverance.    

Debt Collecting- An Uphill Battle

Debt collecting is getting harder and harder.  The reason for this increase in the difficulty of collecting debt is related to the increase in rights that are given to the one that is in debt.  The government offers less protection on the part of the lender.  Nowadays, it is the one that is in debt that gets the most protection.   Take a look at a few regulations that make it nearly impossible to collect debt in a timely fashion. 

The word ‘harass’ is not used sparingly in the bounds of the debt collectors regulations.  Pretty much anything more than a few calls can constitute as harassment under the government’s eyes.  Debt collectors are not allowed to make repeated phone calls.  This obviously poses a problem for a collector when the person they are trying to reach is dodging them. 

Debt collectors are not allowed to call a person before 8am or after 9pm.  With that being said, they are also not allowed to call the borrower at their place of employment if you specify.  How can the debt collector reach their prospect if their work hours are the entire day?  It begins to be a cat and mouse game of making phone calls in hopes that you will get lucky enough to reach the person.  Good luck reaching them if they are expecting your call.

As if debt collecting isn’t hard enough, the person in debt can also make a request to only be contacted through mail.  Once this request is made the debt collector is no longer allowed to make phone calls.  With this method, the collector doesn’t even have the opportunity to ensure the one in debt is reading the letter or getting the message. 

With the rise of debt also comes the rise of protection against those in debt.  Debt collecting isn’t going to get easier as long as the government continues to offer maximum support to the one in debt and minimal support to the collector.  

Florida Broadens the Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act (FDCPA) gives all debtors some rights when it comes to collecting debt.  Often times, collectors only have one motive, and that is to collect the money.  The collectors or creditors don’t tend to take into consideration the damage they are causing in the process of them gaining their claim. The Fair Debt Collection Practices Act is provided to protect the debtors from unlawful collecting tactics that have been used in the past.

Some of the things that the Fair Debt Collection Practices Act prohibits are:

·         Contacting consumers outside of  8:00 AM and 9:00 PM

·         Misrepresentation

·         Harassing the consumer with phone calls

·         Publishing the consumer’s name on a ‘bad debt’ list

·         Communicating with a consumer at their work after being asked not to

The list of protection that the FDCPA offers extends far past that, however Florida has taken those laws and broadened them.  Florida’s laws protect the consumer more.  Their laws also apply to creditors as opposed to the FDCPA whose laws only apply to collectors. 

Florida also gives legal rights to the consumer.  If a collector or creditor has been abusive, or has broken one of Florida’s guidelines, the consumer may sue in a court of law.  The compensation that would be received would be for punitive damages. 

Some of the statutes that Florida upholds include:

·         Collectors are not allowed to communicate with the debtor during inconvenient times

·         Collectors are prohibited from mailing collection requests in a clear envelope

·         Collectors are not allowed to harass the debtor’s family

When it comes to debt collectors, Florida’s laws seem to favor the consumer.  Florida takes an already strict set of guidelines and expands them further in hopes to make a fairer environment for the debtor.  

Debt Collecting - A Psychological Approach

Debt collecting is a frustrating Endeavour, because it is so inconsistent in nature.  While one borrower pays, the other doesn’t.  Collecting debt is not easy, however there are a few things that should be taken in mind when it comes to bank debt collection. 

Recent studies have shown that bank debt collectors are starting to take a psychological approach to collecting their debt.  After all, psychology is the study of the mind, so wouldn’t it make sense to want to get into the heads of the borrower? 

In previous years, debt collectors have taken an aggressive approach.  When one was attempting to collect they would do so by calling the borrower’s phone constantly.  This is not the approach that is psychologically sound.  Studies show that people in debt are more likely to pay when they receive a letter vs. a phone call.  This is contrary to what has been previously thought.  The reason for this is because when someone has a piece of paper sitting in front of them they feel more contractually obligated than if they had received a phone call.  The piece of paper also is a constant reminder of the debt, whereas a phone call is brief and soon forgotten.

 

Another psychological strategy that bank debt collectors are taking is to be friendlier to those they are attempting to collect from.  Studies have shown that people are more likely to pay to companies that are kind to them.  It’s also important to offer flexible paying options.  If a collector were to start a conversation with demanding an absurd amount of money for a monthly payment, chances are the borrower will get overwhelmed, and instead of paying little by little, they will pay nothing at all.

When it comes to debt collecting, don’t neglect the aspects of psychological science in your strategies.  By understanding the mind, and how it works, you are better equipped to handle the task of debt collecting. 

Which Kind of Debt is Easier to Collect?

Image via thegrio.com

When it comes to debt there are two main types- unsecured and secured.  These two forms then proceed to break into smaller sections, however for the purpose of this post we will just focus on secured and unsecured.

Secured

Secured debt is explained in its name.  Secured debt is secured by the borrower with an asset.  This asset is what is used for collateral in order to get the money back.  A secured loan has both its positives and negatives for the borrower.  Usually, a secured loan will have a lower interest rate.  The main drawback to a secured loan is that the asset that was put up as collateral could easily be taken if the money is not paid back.  

Some examples of secured debt would be:

• Mortgage loan
• Car loan
• Boat loan
• RV
• Other large loans

Unsecured

Unsecured debt is pretty much the same as secured, except for the fact of not having collateral.  In an unsecured loan the promise to pay back the money is there, however there isn’t the security that you have for a secured loan.  The good aspects of unsecured debt would be its convenient and it’s easy to qualify for. With that being said, the negatives can be quite costly.  Some of the negatives of unsecured debt include high interest rates, and pricy fees. 

Some examples of unsecured debt would include:

• Student loan debt     
• Small bank loans
• Credit card debt

When it comes to collecting debt, it is a little easier to collect secured debt than it is unsecured.  Secured loans are less risky than lending under unsecured loan pretenses.  The reason for this is because the secured debt will have an asset to go after if the borrower doesn’t pay.  This makes secured loans the most sought after form when lending out money.