What is a Collections Lawyer?
Collection Lawyers are attorneys who are hired by businesses, credit agencies, banks, corporations to collect on debts owed. Collection lawyers are retained when customers of businesses are delinquent on their debts for an extensive period of time and all other options have been exhausted in collecting on the debt.
A collection lawyer should only be retained if all other resources have been exhausted. When attempting to collect on a delinquent debt a creditor should first attempt to deal with the individual personally. This includes sending letters and phone calls reminding the individual of the debt and the possible consequences that can result from failing to account for that obligation.
If letters and phone calls don’t work the creditor must decide whether to hire a collection agency or a collection lawyer. A collection agency will usually charge between 25% and 30% of the amount that they recover. A collection agency continue to send letters and attempt to collect on a debt directly from the debtor.
Your last resort is to retain a collection lawyer to pursue a claim against a debtor. The collection lawyer will then file a complaint with the appropriate court system and begin the process of litigating a claim.
Why do I need a collection lawyer?
When you are looking for a collection lawyer you want to keep a number of factors in mind. You need to analyze the amount of debt that is owed; the costs of collection on the debt; the likelihood of recovery; the solvency of the debtor; and whether the debt is a secured or unsecured debt.
A secured debt is a debt that has collateral attached to it such as a mortgage or other lien. If the delinquent debt is secured then it is easier to collect on the debt through the use of a collection lawyer. When a debt is secured by a lien or mortgage the collection lawyer can help to begin foreclosure proceedings.
An unsecured debt is one in which collateral is not attached. This is much more difficult to collect and often the use of collection lawyers is necessary to litigate the matter in a civil court so that the creditor may collect.
Another factor to consider when contemplating the use of collection lawyers is the solvency of the individual and what is to be expected by a foreclosure on secured property. Foreclosure proceedings can take a long time and during that period of time the business can be losing money on the debt due to the “time value of money.” In these situations a collection lawyer will be in the best position to negotiate a settlement that will help a creditor receive compensation immediately instead of going through the drawn out, and expensive, process of foreclosure.
Collection Lawyers should also be retained when an individual has claimed bankruptcy. Bankruptcy is declared by individuals who cannot afford to pay their creditors and essentially entails giving them a second start. Bankruptcy shields an individual from his, or her, creditors and a collection lawyer will be necessary to help a creditor take steps to collect on debts owed by individuals who have declared bankruptcy.
A collection lawyer can also help creditors with the legal aspects of collecting on debts through repossession of property. There are laws that correspond with the proper way to handle the repossession of property and if those laws are not followed correctly it can lead to civil action and possible criminal charges against the entities in charge of the illegal repossession. A collection lawyer will make sure that all steps are followed appropriately in repossessing property.
Qualifications & Experience
When looking for collection lawyers, experience is a must. You want a collection lawyer who focuses his, or her, practice primarily in debt collection. You collection lawyer should be barred in the state where you are pursuing the debt. If you retain a collection lawyer you should make sure that the collection lawyer will be able to litigate the claim in the state where the litigation will take place. If your collection lawyer is not barred in that state then he, or she, can be of no legal help to you if the matter proceeds to legal action.
You also want a collection lawyer who has a high success rate in collecting on judgements. Choosing to use a collection lawyer instead of a collection agency can be expensive and if you use that option and don’t collect on the debt it can cause you to lose even more money. You want collection lawyers that have a high return rate both in the percentage of cases won and the percentage of the overall debt recovered.
Rates & Fees
The use of a collection lawyer can be expensive. A collection lawyer will often work on a retainer agreement in which the collection lawyers will get paid only if you recover from the debtor. If the collection lawyers are successful they can collect up to 30% of the amount recovered. This is based on what is stipulated in your retainer agreement. The collection lawyer, in addition to any award from settlement or litigation, will also be entitled to costs incurred by the collection lawyer. These costs can include investigators, experts, consultants and the cost of faxes, copies and other clerical costs.
What questions to ask?
When seeking a collection lawyer you should have a number of specific questions ready to ask your prospective collection lawyer. You want to look at interviewing a collection lawyer in the same way you would interview any potential employee. These are a few questions that you should keep in mind when discussing potentially retaining a collection lawyer.
■ How much is your fee?
■ Do you think I will be able to collect on the full debt?
■ How are you going to go about collecting on the debt?
■ Where did you go to law school?
■ What costs will I be incurring?
■ Will this case involve investigators, experts, etc.?
■ Do you have experience with bankruptcy?
■ What is your record with debt collection?
Collection Lawyer
Collection lawyers are attorneys, barred by the state, that work on behalf of businesses, collection agencies, banks, and credit unions. Collection lawyers are retained by businesses when their attempts and collecting on a debt through their own resources, the business and collection agencies, have failed. When contemplating retaining collection lawyers a business should think about the costs versus the benefits of retaining collection lawyers to recoup a debt. A business should analyze the history of interactions with the customer and how much debt they owe before considering hiring collections lawyers.
A collection lawyer can also advise businesses on how to properly repossess property. A collection lawyer will have a good understanding secured transactions what the legal limits are in retaining property. An individual hired by a debt collector who breaches the peace can be arrested, even during the lawful repossession of property. A collection lawyer can help you to know, and stay within, the law. Debt collection agencies can charge 25 – 30% for their services. A debt collection lawyer will often ask for the same percentage plus the collection lawyer will also require that the client pay for fees incurred including faxes and copies.
