Debt Collection Agency Fees
by: JRRooney |
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One of the major benefits to working with a collection agency is that you only pay a fee if they successfully collect on the file you give them. This means if they can't collect your money, you don't pay a dime.
Notwithstanding, this isn't always the case. If you have a few smaller debts ranging form $10 - $500 each, the collection agency could require a fixed fee to handle those small accounts to make it profitable for them.
A Collection agency earns its money by taking a small percentage of the money they successfully collect. This percentage can range from 10% to 50% with the most common percentage being between 25% and 40%.
The variance of the fee is typically based on how old the debt is. Older debts can be more difficult to collect and the agent will require a higher fee to go after those accounts. Also, make sure you factor in how difficult it will be to collect certain debts. As a general rule of thumb, the riskier the debt, the higher the fee.
Some agencies will charge you for several other charges related to their collection efforts including fee-based background checks, court costs, filing fees, and long-distance telephone calls.
Before any collection agency will work even a single claim, they will write up an account release form that details the terms of your working arrangement including their responsibilities, the fees, any additional expenses, and customer service policies.
As with any contract make sure you read it 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.
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When you want free information from a Collection Agency or get free information from a Collection Company Don't reprint this exact article. Instead, reprint a free unique content version of this same article.
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