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Should You Hire a Debt Collection Attorney for Your Business?

Should You Hire a Debt Collection Attorney for Your Business

Depending on your needs, it may be best for you to hire a debt collection attorney to recover any outstanding debts.

  • A debt collection attorney helps you take the necessary legal steps to recover client debts.
  • You should hire a debt collection attorney to recover large debts, pursue large corporate debts, or receive other legal assistance.
  • When hiring a debt collection attorney, consider factors such as fees, specialties, and representation in court.
  • This article is for small business owners who are considering hiring a debt collection attorney to recover debts from non-paying clients.– In business, there is always the looming concern of doing a great job for a customer who never pays. While frustrating, this scenario doesn’t leave you completely without recourse – you can always take legal action to try and get back the money you owe. In this case, you will need a debt collection attorney by your side. Before continuing on this path, it is important to understand more about this type of lawyer, what you should know when hiring one, and how they differ from debt collection agencies.

What is a debt collection attorney?

A debt collection attorney is an attorney who can work with you to develop legal strategies for recovering debts from non-paying clients. Their job is often to complete and file documents for you, and if your case goes to trial, they usually represent you in court.

On the other hand, some debt collection attorneys are more inclined to represent debtors than creditors. In these cases, lawyers work to protect those who have been sued.

When would you need to hire a debt collection attorney?

You may need to hire a debt collection attorney in the following situations:

  • You expect your case to go to court. If you’ve been chasing your debt for so long that you expect to seek legal process before getting your money back, you should hire a debt collection attorney. While you can theoretically represent yourself in court, a professional with experience in relevant laws is much more likely to get a ruling in your favor.
  • You must send letters of request. Let’s say you hope your case goes to court, but you prefer not to sue. This is where request letters come into play. With these legal documents, you will share your side of the story and tell the client that he will not face legal action if he pays a certain amount. Sometimes, when non-paying customers receive these documents, the thought of legal action forces them to pay before they sue. A debt collection attorney can help you write effective and legally valid application letters.
  • Your client owes you at least $ 5,000. Some debt collection experts recommend hiring a debt collection attorney whenever a non-paying client owes you $ 5,000 or more. In general, as long as a debt is large enough to make it seem like the cost of legal representation is worth going to court, hiring a lawyer is a good move.
  • Your client is a great company. Larger companies often have more resources to combat attempts to force them to pay their debts. Debt collection attorneys are often well versed in how large companies can use these resources, so they can be helpful when looking for corporate debt.
  • You need any other type of legal advice or debt collection assistance. Discussions about how to collect debt often involve collection agencies. However, these agencies cannot provide legal advice or initiate legal action; Only a lawyer can and a debt collection lawyer will know all relevant laws and advise you appropriately.

What to consider when hiring a debt collection attorney

When looking for the right debt collection attorney, you should learn and consider the following about each candidate:

  • How much does a debt collection lawyer cost? The cost of filing a court case to recover debts often runs into the hundreds of dollars. If you are successful, you will likely have to pay a third of your recovered debt and possibly additional expenses to your debt collection attorney. As you search for attorneys, ask each candidate about the compensation structure and ask yourself if you can afford the costs of going to court.
  • Are the skills of the lawyer appropriate for your case? Some debt collection attorneys are experts in winning cases against large companies, but they have no idea how to manage small business debt. Ask candidate attorneys to share their background so you can see where they excel and where they lack experience. So, if you go to court, choose the lawyer with the best skills for your needs.
  • Do they specialize in your type of debt? The skills of a lawyer aren’t the only indicator of how well suited they are to your needs. In other words, an attorney experienced in large business debt collection may not be able to recover small business equipment rental debts. Discuss your type of debt with your prospective attorney to determine if their services will work for you.
  • How do they manage communication? Lawyers can be quite busy, but their busy schedules shouldn’t get in the way of communication with you. Sure, you’ll get an idea of ​​your prospective debt collection attorney’s communication process as you search for attorneys, but this initial impression doesn’t tell you much. You should also explicitly ask how often your lawyer will update you during the trial and decide if his answer works for you.
  • What do their references say about them? A reputable debt collection attorney should have a list of references, ideally previous clients, readily available. Also, they should have no problem connecting with these references. Use what you learn from these references to assess whether the attorney is right for you.
  • Do they work independently or within a company? A freelance attorney can work outside of a company because his strategies work better when running the show (and if you’re a freelance debt collector, you can probably relate). However, freelance lawyers may lack resources, including time, that are more easily accessible to businesses.
  • Will they really represent him in court? A debt collection attorney can represent you in court, but not all attorneys will. Some lawyers prefer to work as consultants who have never set foot in court. If you don’t know this preference in advance, you may be left unprepared when it comes time to sue. If you need a lawyer who can go to court, make sure that’s what you’re really getting.

Hiring a debt collection attorney vs hiring a debt collection agency

As mentioned above, if you are looking for legal advice, you will need to hire a debt collection attorney rather than hiring a collection agency. You should also consider these factors when choosing between a lawyer and an agency:

  • Costs. Some debt collection agencies will collect 25% of your debt to work for you; some may even charge 50%. A 25% commission is likely less than what a lawyer will cost, while 50% is more. However, in some cases, a court ruling in your favor will require your debtor to cover legal fees, so your fees may not matter.
  • Probability of payment by the customer. If it’s not clear how much the client is likely to pay, you can try starting with an agency. If it’s clear that your client isn’t paying for it, going straight to a lawyer can save you time and possibly money.
  • Urgency. Debt collection agencies cannot directly force debtors to pay or take legal action that will bring you one step closer to this goal. Debt collection attorneys, on the other hand, can submit request letters on legal letterhead, which can compel the debtor to act even before a formal lawsuit is filed. Also, only lawyers can represent you in court and get a binding decision from a judge.
  • How much you really want to go to court. If you are not interested in taking your case to court, it may not be worth hiring a lawyer. In this case, choose a collection agency or leave the debt alone. Some long overdue debts, believe it or not, are best left unpaid. Acquiring new customers can be a faster, more reliable and certainly less frustrating way to close the cash flow gap that has been left to your debtor.

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