There are times when you have to face the inevitable: using a third party to collect money owed you from your debtor. You’ve exercised patience, persevered in making contact, appealed to their sense of decency... and all for naught. It’s time to hire the services of a debt collection agency.
Understandably, not all debt collection agencies are created equal. You should definitely go with one that charges a reasonable amount for being effective. Nonetheless, you have to realise that there are many variables involved in the determining debt collection prices. You want to make sure that the fee you pay for getting your money back is worth the service.
The debt recovery process usually follows the following pattern. You lodge the debt, the agency works on it, crafting a payment plan which is presented to you once finished. After this, your debtor is contacted based on the details you provided. Your representative from the agency pursues your debtor until money owed is collected or a payment plan is in place. You are then paid at regular intervals with the balance after fees have been deducted.
Normally, it doesn’t cost you to lodge a debt with an agency. In the event of a successful collection, however, the percentage of the amount collected an agency keeps as commission varies. It can be anything from 10% to 50%. It may seem like a no-brainer to go for the smallest percentage, but it’s best to read all terms and conditions in the contract before you agree to anything.
In other special cases, there is a need for extra services such as tracking and legal procedures. You will be informed of their costs and, upon your agreement, these tasks will be carried out and you will be accordingly billed for them. This is often the practical pricing and procedure option for creditors, but you should be aware that there are services that charge a much higher, but fixed rate. When confronted with such a choice, make sure to carefully look for a clause in the contract that guarantees success, or you may end up paying the fees without ever getting your money back.
You’ll definitely want an agency to regularly do business with if you’re business involves residential tenancies; tenancy debt collection is sadly a service often needed. Make sure that you have an upstanding agency to rely on for this. It’s always a good idea to go by reputation. If an agency is known for being efficient and trustworthy, you probably won’t go wrong with the decision to hire its services.
Do you have have any questions or suggestions? Write in comment section.
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