Once a debt has become sufficiently overdue and all the in house efforts have not borne fruit, then it would be prudent to seek the help of an expert - either a debt recovery agent or a lawyer. The magnitude of the problem of bad debts can be appreciated from the fact that each year billions of dollars of bad debts are recovered in U.S. if one looks at the figures released by American Collector Association. This article discusses some of the pros and cons of a debt recovery agent vs. a lawyer.



Debt recovery agents usually adopt the same line of strategy as the creditor to recover the debt: write letters and follow it up with phone calls and keep of track of collections, if any. They may have automated their system through specialized phone systems that keep track of phone calls and computers with software that generate warning letters periodically. If all these efforts fail, then they also have to approach a court through an attorney. There are a various types of debt recovery agents - some are specialized in recovering specific type of debt like health care defaults for example, some operate nationwide and some locally. The cost of collection depends upon the size and age of debt but usually vary between 20 and 40% of the amount collected.

Debt recovery can also be done with the help of attorneys who specialize in doing the job. Attorneys may be more effective in cases which are serious and legally complicated in nature. They may charge by the hour or a percentage of the amount collected or both. For small debts there may be a minimum threshold amount below which a lawyer may not be interested in the job. The total charges that you have to bear if you decide to approach a court will be lawyer's fees plus court fess and other related charges. Hence if you are not inclined to go to court then you need not approach a lawyer.

Before contacting a debt recovery agent or a lawyer, it is better to check their past track record. Who is more cost effective depends on the complexity of the case. Sometimes a few reminders from an agent may do the job while some other cases may require a prolonged battle in court. Approaching a debt recovery agent first and then a lawyer is probably the most expensive situation.