Credit Management Professional
Why Employ A Professional Debt Collector?
Apr 14, 2016
A professional debt collector is the most effective and cost efficient collection tool a creditor can utilize to collect their charged off accounts and judgments because of their business model. To fully understand I will explain in detail.
After an account ages and the creditor fails to collect, an attorney is retained to pursue a judgment on medium to large balance accounts. Once the judgment is awarded, the creditor will request the attorney to record it against the real property listed on the debtor’s credit application. If the judgment has a large balance, the creditor will ask the attorney to conduct an asset search. As trained in law school, attorneys will attempt to locate assets by sending written interrogatories or conduct depositions. Usually the interrogatories are not returned or returned incomplete and debtors get “convenient amnesia” during depositions. Both actions taken to locate assets to execute the judgment against are expensive and provide limited to no results.
When a creditor charges off a large volume of small balance accounts, they assign them to a collection agency. Agencies are limited in the actions they can take to collect on accounts such as making phone calls and sending letters. Of the accounts that are collected, it usually occurs within the first four months. Unless progress has been made on an account, no further action is taken after that time.
A law firm’s business model is structured to litigate. Attorneys are not taught in law school how to collect and creditors can’t afford to pay them $250 to $500 an hour to learn.
A collection agency’s business model is structured to handle large volume of accounts. Auto dialers are utilized to make the maximum number of calls per hour and automated systems are used to mail collection letters. If an account is not collected within the first four months, they can’t afford to spend any more time on it because of the influx of new monthly accounts.
A professional debt collector’s business model is the most effective and cost efficient. Because they are trained to locate debtors and their assets, accounts are collected at a higher rate. Unlike collection agencies, all collection tools are available to them such as pursuing judgments, skip tracing, sending letters, making calls and executing judgments against real and personal property. Also creditors do not have to pay for their services until funds have been collected unlike attorneys.
If the methods used to collect your bad debt do not provide the results you are expecting, I recommend you contact a professional debt collector. Within a few months, you should realize an increase in your corporate profits due to the increase in bad debt collection.