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Good debt collectors are hard to come by when choosing a collection agency. Good debt collectors once they are talking with a debtor, probe to find out what is going on. Often, the loss of a job, an illness, divorce, or maxing out the credit cards results in a person becoming dysfunctional when it comes to handling his/her financial obligations. He/she is embarrassed and frequently a little frightened and reluctant to discuss the problem. Good debt collectors and a good debt collection agency will often be able to draw the debtor out. Debt collectors are not allowed to play attorney by advocating bankruptcy. In fact, they have to be very precise when talking with debtors. However, they can suggest debtors who said they have financial difficulties contact a legitimate credit counseling service. the credit counseling service will help the debtor to work out a payment plan that will enable him/her to gradually pay off creditors. You as the collection agency will have a small commission deducted from the money that is earmarked for you, but it is well worth it because you will be cashing checks on a monthly basis.
Be familiar with the debt collection letters the agency sends to your clients. The letters should be firm but not threatening. They are used simply to get the attention of your clients, and you will be amazed a the attention they get. The letter service also helps you determine if a client has no intention of paying you. Some debtors will call you immediately after receiving the first letter and offer to make payment arrangements. Before you send the debt to a collection agency, ask yourself how much you will collect without the assistance of a collection agency and how much their debt collection recovery rates will be with their assistance. Some agencies charge up to 50% of whatever they are able to collect, but that is still better than collecting nothing at all by yourself.
When all avenues of communication have been exhausted, this is the time you as the business owner may want to think about involving a debt collection agency. Many people think of collection agencies in a negative sense. But there are many credible agencies out there that for a minimal investment on your part, can be used as a tremendous tool to assist you in collecting significant amounts of money. Take the time to contact several debt collection agencies to hear what each one has to offer. It is best to choose a reputable long-standing collection agency that you can trust. The agency should be a member of both national trade associations, the Associated Credit Bureaus (ACB) and American Collectors Association (ACA). These organizations provide all important standards and training and require the agencies to abide by the Fair Debt Collection Practices Act and to follow all of the guidelines of state and federal debt collection laws. Make sure the agency you choose is insured, licensed and bonded, as well as licensed to collect in other states. Find out if it has handled collections from businesses similiar to yours and ask for references.
Need help choosing a collection agency? There are collection agencies that cater to every kind of debtor. Some agencies even create automated collection programs specifically geared towards the "slow pay" or 60 to 90 day late cycle. If you are a small business and you want to get a debtors attention, they will recognize the serious impact of receiving a letter from a collection agency. These automated letters tell a debtor that a collection agency is involved and collection efforts may accelerate should they not tend to the issue. These programs should use the NCOA (National Change of Address) option to help assure deliverability.
It's not important to know what an agency's rate of collection is, because every debt is different. The only rate that matters is what percentage the debt agency will take and if it actually collects something. It is helpful to the agency (and the attorney) if you as the business owner have a bottom line figure in mind when negotiating a settlement. Yes, it's depressing to think about a debtor getting away with anything but settlements are frequently the only way that at least some money can be recovered using good debt collectors. Agencies (and attorneys) will naturally want to collect as much as possible, because they are being paid on a contingency basis, which means they receive a percentage of what they collect. They also have an inclination to work out settlements, so that they can guarantee making something acceptable on the deal. Effecting debt collections takes time, which means that is costs money to make the effort. One way or another, it is going to cost you as the business owner money and good debt collection agencies are worthy of their hire, as are good attorneys. since you the owner have already successfully written off the past-due balance on the books, anything that comes your way is found money. It's only fair that you split the proceeds with the person(s) who helped you find it.
|Sheri Ann Richerson|