Getting The Biggest Bang For Your Buck By Using Law Firms Rather Than Agencies

It is never pleasant to have to resort to stronger measures than a friendly reminder letter in order to collect the money owed to your firm.  Of course, there are a number of ways to go about it, but the aim is to make the best out of a frustrating situation.  When you need help, choose the kind of assistance that will treat you like the valued client that you are.  In general, law firms have a better understanding of the importance of treating a client with respect.  This is a definite advantage of hiring a law firm to represent you over a collection agency.

Debtor Attention

Your dollar will also go much further with a law firm than a collection agency because an attorney or law firm representation immediately commands greater attention.  Debtors may have faced collection agencies before and totally ignored them, delaying collection for many months if not years.  Collection agencies do not have the knowledge of the law an attorney brings to the table.  They may use offensive and disrespectful measures that can give the whole industry a bad name and which will delay any recovery you may hope for.  By working with a law firm instead an agency, your recoveries should increase in an ethical manner that is respectful and legal. 

Collection And Litigation

More tangibly, hiring a law firm for debt collection is a plus because if the debtor proves to be unwilling or unable to pay what he owes you, a law firm can begin litigation immediately.  You do not have to go and hire an attorney once the collection agency has failed in its recovery efforts.  The attorney assigned to your debt collection has all the facts in front of him.  He will also be aware of the debtor’s previous subterfuges and evasive maneuvers.  This saves time and effort, which is to your benefit. 

How is using a collection firm better than using a collection agency when going after debtors?

Are Debt Buyers Reluctant To Buy Paper Because Of Regulatory Compliance Issues?

With tens of millions of Americans owing an average of $1400 to $1500 in debt collection, business for collection agencies and law firms is booming.  Purchasing debt for four to six cents of each dollar owed can prove to be quite lucrative.  However, the Consumer Financial Protection Bureau has recently implemented several new regulations.  These regulations may dampen the enthusiasm of buying paper debt for some collection agencies.  Many of the new regulations apply to mortgage lenders but some also apply to regular non-mortgage debts.  The CFPB has produced extensive information in this regard that can be downloaded from the internet.

New Collection Tactics

Because of new consumer protection, collection agencies and law firms are stepping up their “bedside manner” when it comes to collecting debt.  All investors and companies that purchase debt are more reluctant to purchase debts because of the new regulations.    Some agencies are not procedurally equipped to be compliant  rather than just demand payment.  Law firms may be able to deal with such changes because more effectively since they are skilled at reading and interpreting the new laws and regulations than straight collection agencies.  Attorneys deal with many different clients all the time and are therefore more flexible in gauging their assistance accordingly.

Law Firm Vs. Agency

Any new regulation handed down from the government, whether state or federal, is bound to include lots of paper work and even more reading.  Attorneys read, among other things, for a living.  Their eyes and minds are trained to see flaws and benefits in any legal document immediately.  Because of their extensive exposure to legal documents, they are much quicker and much better at adhering to new laws, thus avoiding hefty fines for non-compliance.  Law firms still will be very effective in collecting debt on behalf of their client, the creditor.

Why are collection law firms better equipped in collecting paper debt?

Student Loans – When Should A University Commence Suit Action Or Is It Appropriate To Sue Ex Students?

When it comes to collection for student loans and money owed to the university, sometimes the educational institution may find itself with two options.  The first one would be stay with collection efforts or go for suit action.  While you may think that a lawsuit may get the attention of the person more than a collection effort, in reality it is a lot better to stick with collections.  There may be many different reasons why the student has not made the necessary payments for the outstanding amount.  The problem is that not every collection agency will take that into consideration. 

Getting The Attention Without A Lawsuit

If a student has been dealing with the same collection agency, they may not feel as if there is anything else that the collection agencies can do other than to give them an annoying call a couple of times a day.  One good strategy to try to get the attention of the person who owes the money is to switch from an agency to collection law firms.  You are not yet starting a lawsuit against the person.  However, the fact that you are actually talking to collection lawyers may be enough to at least start some start of payment plan. 

More Flexibility

Sometimes agencies will not pay much attention to the needs of the student so it is important that if you use collection attorneys that you use the right ones.  The attorneys should be ready and willing to listen to the needs of the person while at the same time collecting the money that you need coming in.  By actually listening to what the person has to say and what they can actually do, it is a lot more likely that the payments will start coming in.  So before you try to go for a lawsuit, make sure that you talk to collection attorneys first.  

What Are All The Commercial Collection Accounts? Have Creditors Tightened Up Too Much?

Most people who are in the industry realize that it seems that in recent years collection agencies have started to greatly increase their number of accounts.  Many people as well as small business owners worry that the increase in commercial collection accounts is due to creditors tightening up and while that may be true to some extent that is not the only issue.  Part of the increase in collection law firms is simply that creditors are discovering new ways to collect on the money they are owed and in today’s economy, they want to be sure they have all the money that they deserve. 

Turning To Agencies

If you take a close look at the trends, you will notice that in the past when there seemed to be fewer collections, that was because most companies would take care of them themselves.  This means that they would designate someone, or a department, to take care of collecting on the debts.  In recent years, however, these companies have increasingly realized that they simply aren’t prepared to do this.  Because of that, they are turning to collection agencies to do the job for them.  This means that it is not necessarily an increase in collection of debts, simply an increase in amount of accounts with commercial collectors. 

Collecting More

With an increase in the use of collection agencies and therefore commercial collection accounts, more companies are able to collect on their debts.  This does not mean that they are getting “tighter” with the money.  Instead it means that they are finding more effective means to receive their money.  The increase in collection is more or less due to the more effective strategies used by these collection agencies as opposed to individual companies themselves.  Because of the success of these agencies, creating a commercial collection account may seem like the only reasonable option for a given company. 

Are Debt Buyers Reluctant To Buy Paper Because Of Regulatory Compliance Issues?

The main way which debt buyers stay in business is by purchasing paper debt.  They will purchase for a lower amount than what is owed and when they collect on the full debt or partial debt, the profits go to them.  One of the problems currently with that business plan is that collection agencies are feeling a bit reluctant when given the option of buying that debt.  That is because many states have increased the amount of regulations a company would have to follow when doing so.  That reluctance of buying debt has translated to some companies going out of business. 

Why The Reluctance?

Collection agencies and collection attorneys do have to pay a lot of attention to the regulations in every single state.  The problem is that every state will have its own regulations when it comes to paper debt and those regulations can change at any moment the legislature meets.  The agencies or attorneys have to be on top of these regulation changes or otherwise they can risk hefty fines depending on the state they are dealing with.  That is why you will see a lot of businesses focus on a few states as opposed to the entire country. 

Why Collection Law Firms?

 

Collection law firms have been active getting a different type of debt and they are better suited to do so because lawyers are used to dealing with a large amount of paperwork.  That means that all the regulations that pass, not only will they be able to read it and get on top of it, but they will also understand it.  This allows them to follow any type of regulation changes right away instead of going through different stages trying to understand what it means.  Collection attorneys are better prepared for any changes that can come their way with different types of accounts and from different states.