When To Use A Collection Agency

The Best Time For Collection Agencies

You should use a collection agency when -

you know the debtor has the ability to pay
the debt is due
there are no announced reasons for not paying

A debt collection agency will approach the issue through a multi-stage writing campaign which can be effective, if occasionally slow, but it may not lead to recovery when -

the debtor has or thinks he or she has a defense
the amount owed is disputed
there is an unrelated adverse claim
the debtor's solvency is in doubt or there is the possibility of bankruptcy
there is security to recover or a possible prejudgment remedy

If any of these circumstances occur, the creditor should for their own legal protection retain control of critical decisions such as if and when to litigate, what attorney to retain and any other decisions made prior to or during litigation. This is particularly important where the creditor has a long term interest in retaining the customer as his client. Not retaining control of critical decisions and proceeding without the advice of an attorney could leave the creditor open to adverse legal liability.

The option exists where this is not the case and the creditor is not interested in the outcome of a debt collection, beyond getting his money, to sell the debt to a debt buyer.