However, this is not always the case. If you have some small accounts under $500, some collection agencies may require a flat fee to handle those accounts to make it worth their while.

A Collection agency can earn its fee by taking a small portion of the money they successfully collect on. The percentage can range from 10% to 50% with the average being between 25% and 40%.

The amount the agency keeps is typically based on the age and the dollar amount of the claim. The older the debt the more difficult it is to collect and the agency will require a much higher fee to go after that debt. You should factor in how difficult it will be to collect. Certain debts are riskier to collect and therefore require a higher the percentage.

You could be responsible for some other charges related to their collection efforts including fee-based background checks, court costs, filing fees, and long-distance phone calls.

Before a collection agent works on a single claim, they will write up a contract that details the terms of your working arrangement including their responsibilities, the fees, any additional expenses, and customer service policies.

Be sure to read the account release form over carefully for any fine print or contract language that seems confusing. If you notice discrepancies in the contract, make sure the agency fixes the problems immediately before asking you to sign it.