Debt Collection Solicitors or Debt Collection Agency?

Debt Collection Solicitors vs Debt Collection Agency

When an invoice goes unpaid, many Businesses ask themselves should I use debt collection solicitors or a debt collection agency. Once all efforts have been ignored and invoice late payment reminder email has gone unanswered, it is time to take action. Maybe it is the first time that you have had an invoice not get paid or simply got fed up with an ineffective debt collection company, either way there is help.

Whether you are a small business, large company or simply a contractor that has not been paid, debt collection offers a great solution to collecting unpaid invoices. Choosing the best solution for you and your business is

Debt Collection Solicitors

Sometimes a letter before action sent from a solicitor can work. Unfortunately, if there is no response to the letter before action, the only option with a solicitor is to issue expensive legal proceedings. Solicitors are traditionally fee earners and charge per action and charge for their time. They may also charge a up front retainer fee.

A basic letter before action from a solicitors may only have little impact. After all, they have already ignored a business invoice payment reminder so are obviously intent on not paying. The only option if a letter before action is ignored is usually to go to legal proceedings. This can lead to very expensive fees for the solicitor and hefty court fees. You will also be liable for legal representation in court if it progresses that far.

It is said that nearly half of all CCJs go unpaid which could mean as well as a huge bill for legal fees, you still do not manage to collect the debt owing to you. Even when the CCJ is obtained, enforcing a CCJ means you will need to potentially enlist a Debt Collection Agency or Debt Collectors to enforce it.

Debt Collection Solicitors are definitely a more digestible option when it comes to heavily disputed or contentious debts. This will be able to mediate and apply the relevant laws. Regardless, it is always a good idea to keep up to date on the fees and costs involved during the process. Sometimes, debt collection solicitors may offer a fixed fee mediation programme.

Debt Collection Agencies

In stark contrast to a debt collection solicitor, a Debt Collection Agency will view legal proceedings as a last port of call. Typically, at Federal Management, less than 1% of the cases we deal with requires court action.

A Professional debt collection agency will offer a simplified option for recovering bad debts owed to you or your business. At Federal Management, we provide a low fixed fee solution where a nominal instruction fee is payable for a comprehensive service. A small commission is then deducted from successfully recovered monies. Unlike other agencies, there are no abortive fees to pay if we do not collect.

When a debtor is faced with a persistent Debt Collection Agency they know they have nowhere to hide. They may not wish to pay what they owe but pressure from a DCA will encourage them to make payment, in full or in part. At Federal Management, we negotiate repayment plans where appropriate and measure the debtors ability to pay.

Using a Debt Collection Agency carries minimal risk when compared with Debt Collection solicitors in terms of cost. Collecting debts is the bloodline of a DCA so results matter. At Federal, we provide a free pre-action assessment to ensure there is evidence to suggest the debt is collect-able. We never paint false dawns or rainbows.

If there is no prospect of a recovery due to i.e. company being in liquidation etc then advice is provided to write off the debt and claim tax relief. No expensive debt collection solicitors fees to pay or court fees. Whilst it is not the news you may have wanted to hear, it does protect you from unnecessary legal fees.

Summary: Debt Collection Solicitors or Debt Collection Agency

Whilst Debt Collection solicitors maybe appropriate for disputed or contentious debts, Debt Collection Agencies provide a more cost effective solution for recovering debts.

It is very important to note that not all Debt Collection Agencies have the same professionalism or pricing policies. Working with a transparent and professional Debt Collection Agency will provide a cost-effective solution to recovering unpaid debts. It will also preserve your brand also in the long term.