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Do You Need a Debt Collection Attorney?

Mar 16, 2020

Collecting on overdue accounts takes time, as most people in

person with large book and calculator

 AR know. And in most cases, time and effort will pay off eventually. But what about those times it doesn’t, and you need to call in a lawyer? 

Before You Outsource

Calling a collection lawyer or a debt collection agency isn’t the first step, of course. Your company should have a system in place to notify and remind customers about payment. Customers should hear about your payment policies in advance.

When someone doesn’t pay, you can start with letters and phone calls. You might even add text messaging reminders to your system. Set up a payment plan for those who need extra time or help. Create a timetable for your accounts receivable team so that it becomes as easy as following the steps. 

Collection Agency or Collection Attorney?

Some people will not pay and will ignore all your calls and letters. But calling your own attorney is expensive. Most businesses don’t have a lawyer on retainer or working for them. 

If your company is struggling to collect on payment, a third-party collection agency is a logical next step. An agency is often the best way to keep your accounts receivable ledger mostly current without having to hire a collection attorney — and tends to be far cheaper. Plus, hiring a lawyer may not be a good step if you’re not willing to take your customer to court over the non-payment. 

The teams at collection agencies know all of the legally acceptable methods to encourage payment. Those methods are employed sequentially to expeditiously collect payment in a cost-effective way. 

Another benefit of using a collection agency is that they have more resources for your success — including attorneys. So if an account continues to go unpaid, your collection agency can work with an attorney on your behalf. Sometimes, all it takes for a debtor to pay is a letter from an attorney. 

If engaged, attorneys will have expanded options, and at that point, you are given the choice to proceed further (especially if additional costs are involved), or simply move on. The creditor can decide if they feel further time, effort and expense might be warranted.

In some cases, an attorney will tell you to try a collection agency first. And sometimes, we will suggest a lawyer. Which you hire depends significantly on your business, the debt size, and the situation. We’re happy to answer questions about unpaid bills that are interfering with your company’s cash flow. Contact us to learn more.