Deciding to hire a Debt Collection Law Firm vs Debt Collection Agency might seem similar in concept, but understanding the limitations of a debt collection agency is important. Both debt collection law firms and debt collections agencies are regulated by the Fair Debt Collection Practices Act; however, the abilities on how to collect the debt can be different.
Methods of a Debt Collection Agency
Debt collection agencies are limited in their abilities regarding actions in which they can take to collect a debt. This generally involves constant and continued contact, either by letters or telephone calls, with a debtor to pay all or a portion of the debt. While debt collection law firms can also take those actions – debt collection law firms are equipped to pursue further action if these constant communications are unsuccessful.
Debt collection law firms employ attorneys that are skilled, knowledgeable, and licensed to file the necessary paperwork to bring the case to court. It is common for many debt collection law firms to obtain default judgments once a case is filed. Once a default judgment is entered, an attorney knows the additional actions necessary to collect from a debtor.
These further actions might require filing additional paperwork with the court. This could include filing a property lien on unexempted property, collecting profits from a business or rental income, levying on personal property including vehicles, and garnishing a debtor’s wages. Thus, it is important for a creditor to understand the different ways one might be able to collect from debtor.
Amounts Owed with Debt Collection
Another difference between a debt collection law firm and debt collection agency is determining the amount owed. While some debt collection law firms require a minimum collection balance that is relatively higher, for example $1,000, this could be contrasted by a debt collection agency pursuing balances as low as $25.
However, even though it may appear a debt collection law firm will only pursue a higher balance, this could be misleading. It is common for many debt collection law firms to employ staff collectors to handle low minimum balances. This allows multiple employees of the law firm to pursue debt collection regardless of amounts owed.