Collection Agencies

  1.  A flat fee.
  2.  A percentage of what is collected.
  3.  Through a direct sale of the delinquent accounts.

If you are trying to collect a small or medium sized debt, using collection agencies that charge a flat fee are probably your best option – collection agencies that charge a flat fee work just as hard to collect a small debt as they do to collect a large debt.

If you have just a few large unpaid receivables, working with collection agencies that charge a percent of the total debt collected is a wise choice. (usually 25 to 50 percent).

The third option, selling your uncollected receivables at a discount to certain collection agencies is advisable only if you have a very large amount of debt – usually $1 million or more. The selling price is typically a minuscule 2 to 8 cents on the dollar.

Most collection agencies use one of three tactics to collect debt:

  1.  Letters.
  2.  Direct contact via the telephone.
  3.  Litigation.

Typically, collection agencies begin the collection process by sending a series of notification letters, often called demand letters. The final notification letter generally warns the debt dodger that if the past-due account is not paid by a certain date, his or her name or company will passed on to more intensive collections.