Most of the people in today’s time experience financial problems, and these problems may also lead to a more difficult situation. Also, many prefer to use checks for their payment convenience, and because of this, many are suffering from bad checks or bad credits, also, those who have delinquent accounts are having problems on how to solve it. People are kind of mixed up on how to get rid of these issues. And they are finding solutions to these kinds of problems.In some other cases, especially those who are engaged in business would even seek help and advices from a Collection Attorney. And for all we know, a Collection Attorney is a person who specializes on the rights of creditor/collections as well as it represents businesses, banks, providers of health care, collection agencies and credit unions also other commercial creditors in debt collections, protects and enforces creditors’ remedies and rights which includes remedies if the debtor filed protection for bankruptcy.Now, why do businesses need a Collection Attorney? Well, first, we cannot deny the fact that many businesses whether small or big have funds that are uncollected. Also, we are aware that it will affect the businesses finances, and these may even cause debt problems with their creditors while waiting for their customers to pay them. In this case, a business owner needs to do some possible steps on how to collect in a proper manner and in a short possible time. So with this, it is better to hire a collection attorney who of course will help you in fixing bad debt and the like. Hiring a collection attorney is better than looking and hiring a collection agency, though most of the businesses do not consider this, it is a lot advisable to hire a collection attorney.Why is this good idea? well, first and foremost, collection agencies have collection agents who handle these kinds of stuff, they are the middlemen who collects accounts and when they are not able to get or collect the desired amount. They will then hire or will turn over the work to a collection attorney. And in a collection agency, debtors are used to the spiel that they are doing, like sending them form letters many times and or maybe always calling them. And if they were not able to receive replies or answers to those people they are calling, they will then have an option either to declare that the account is noncollectable or would probably turn it over to a collection attorney.The collection agency’s strategy worked before actually, but since people got used to it, they then ignore all of those. This is why hiring a collection attorney is better than going to a collection agencies. So when a business tries on turning over their unpaid debts to a collection attorney, they will surely have better results. It is because of the collection lawyer’s knowledge on the laws regarding collection. They may oftentimes be aggressive in approaching debtors but business owners will have more assurance that they will get their money back in a shorter time.
Bad debt starts ultimately with a creditor and a debtor. In many situations in today’s economy neither party wanted to be in a creditor or debtor situation. Possibly the debtor did not have money to pay for a service or good, maybe a creditor did extra work not agreed upon, there are a million different situations with another million different circumstances. Bad debt then sits on a creditor’s accounts receivables ledger for a given amount of time, maybe a few months up to years. This often has an emotional effect on creditor’s in particular small business creditors where money is not only expected from a particular service/good but necessary to stay in business.Typically at this point creditors seek help or try to collect on these bad debts on their own. Many are unsuccessful with their own efforts in collections and ultimately end up being sent to debt collection specialists. Debt collection letters are sent out, phone calls are made, and the debt collection process begins.Then external costs such as litigation, skip-tracing, credit reporting and various other fees are often incurred. Creditors are often faced with the thought then of spending more money on potentially bad debt to obtain new monies; money which is in fact owed to the creditor. This creates a certain amount of pressure and stress onto creditors to spend more money for litigation and other premium services. So the big question at hand is, is spending more money on bad debt worth the money to recover bad debt?According to our studies, we have found an unparalleled amount of success with spending money to the efforts of recovering bad debt. Certain collection agencies often offer package contracts to send multiple cases into litigation. There are clear and definitive advantages in doing so. If you have 4 cases of bad debt, one for the amount of $10,000, $4,000, $6000, and $2000 and you pay a collection agency $3,000 for full litigation services. The collection agency is able to recover $5,000 of the original $10,000, $2,500 of the original $4,000, $2,500 of the original $6,000 and $1,800 of the original $2,000.That means the collection agency was able to recover $11,800 of the original $22,000. On average debt collection agencies only usually receive about 10-20% on the far outside of original bad debt claims. Typically up front fee’s allow a much higher rate of success; however, still not promising 100% recovery. In another article of ours “The Proactive Benefit of the Vicarious Collection Effect Phenomenon” we broke down the benefits up front spending. However looking at the circumstances of our current example, $11,800 minus the $3,000 spent for litigation allows for $8,800 of profit, then if the collection agency takes 18% commission (some places do not even take commission on proactive spending accounts) that means another $2124 is given to the collection agency, allowing a total profit of $6,676.In many cases individuals can take bad debt which had $0 worth to them, and turn it into actual money and actual profits. Instead of looking at total balance of what could have been, in this current economy more companies need to look at what is, what is actual bad debt doing, and what is actual bad debt collected. Certain harsh realities must be faced when dealing with bad debt. This is one reason why collection agencies are frowned upon even by their own clients, simply on the basis that 100% of bad debt is rarely collectible.