Published Friday, February 10, 2023 by Alan Holdren

The last stage/option for an agency to collect on a debtor is to file litigation and try to collect the debt given to them by a creditor. As this is one of the last options a to a debt collector trying to perfect a debt, it is also one of the least profitable and time-consuming operations within an agency. I would like to explore why this is and the repercussions that exist for parties on both sides.

When an agency has to pursue legal action the costs start to mount, first you give up half of your fees, pay court costs of est. $70-$150 per case, mobilize a in-house legal group to prepare the case to go to the attorney and now ask their clients and themselves to wait additional time to maybe get paid if the debtor doesn’t quit their job, file bankruptcy or even die that has happened on several occasions that I can think of. All of this to make less on an account all because someone in many cases just doesn’t believe you will do it and many times actually says, “go ahead and sue me”. Therefore, we will usually just do that.

Now the losing begins. A we win 99% of the cases the debtor now has a black mark against on their credit with possible garnishments coming and time lost defending a losing, possible garnishments and even jail time in certain cases (body attachments in some states) case all because of ego. This could have been avoided by settling, cutting a payment deal and saved the agency time and money and credit reports being wrecked and in our current economy, a repair period that is monumental.