Debt Collection Fees

What are the fees for debt collection?

Most debt collection agencies charge a fee for their services based on comission. This is the ‘pay if paid’ system which means that the debt collection agency will charge a percentage of the amount recoved of the debt. Generally, most collection agencies will charge a 30% to 40% commission on the amount recovered. Generally, this is more advantageous for a collection agency where there are larger debts involved and where there is a high prospect of recovery of the debts. If the debtor has substantial assets which they can access to pay the debt and it is a large debt then this can work out very profitably for the collection agency.

Fixed Fee

Although is it rare, some debt collection agencies will do their work on a fixed fee basis which involves them have set prices for services such as issuing a letter, a call or refering to a lawyer. This often works out much cheaper for the client than a commission structure particularly if it is a large debt. However, as a client, you are not protected from them failing to adequately provide a service and apart from previous customer feedback you have no guarantee that your money will be recovered or that the collection agency is doing its job appropriately.

Purchasing unpaid invoices

Some collection agencies will even purchase your unpaid invoices for up to 70% of the value of the invoice. This is a technique used by some debt collection agencies which has developed in the past few years and is sometimes called finance factoring. The debt collection agency relies on its professionalism and skill in collections to be able to ownership of the debts and recover the money for itself. In exchange, the seller of the invoice gets a security for the payment, even at a reduced rate and can farm out the risk of non-payment to another party.

If you are owed money, the first step in any debt collection process is sending a debt collection letter which we have available here for less than the cost of lunch. Why not take action now to recover the money that is rightfully yours. Or, if you need advice there are lawyers online now who can answer your questions about any of the legal aspects of debt collection.

Debt Collection Letter Resources