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To assist you in your decision in selecting a collection agency, we've put together a few questions you should ask of any collection agency that you are considering assigning your accounts to.

“Will I be able to speak directly with the collector(s) handling my assigned accounts?”
Many “collectors” are often just low-paid telemarketers with little or no debt collection experience, and their demand for payment is often weak and ineffectual, usually resulting in the debtor hanging up or offering a small monthly payment arrangement.  You may not be aware of this fact, but most debtors will NOT pay an account simply because they are being contacted by a collection agency.  Additionally, almost nobody responds favorably to a collector that is rude or offensive.  It takes an experienced collection PRO to get the majority of your debtors to satisfy their accounts.  Ask if you can personally speak with the agency’s collector(s) that will be handling your accounts.  If the agency hesitates to allow you to do so, that's a sign the agency is not employing good collection talent. 

“Do you have a full-time attorney on your staff?”

Many large collection agencies have “in-house” attorneys, but as everyone knows, attorneys cost a lot of money.  While having a full time attorney on staff may give the agency bragging rights, there is another side of the issue the agency doesn't tell you about.  Since the agency is paying a very large salary to that attorney, the only way to afford the attorney is to convince you, the client, that many of your accounts need to be sued.  Along with the suit, the agency charges a much higher contingency fee to you, usually an additional 10% to 20% over your regular contingency rate.  As a result, many agencies will pressure you into authorizing legal action against your debtor, although it is often not necessary.  The more accounts the agency feeds the attorney to sue, the more readily the agency can afford his salary.  Even if the agency does not charge you any up-front legal fees, they WILL substantially increase the contingency fee charged to you on accounts that are sued.  At Peak Financial, we operate through a nationwide network of affiliate collection attorneys and we only forward accounts to an attorney that leave us no choice but to sue.  Look for an agency that takes legal action ONLY when absolutely necessary so you won’t be left footing the bill for the agency’s full-time, fee-hungry attorney.

“Do you service large or small clients?”

Many collection agencies “cherry pick” or “cream” the collection accounts assigned to them for recovery, and they discourage collectors from spending more than just a few minutes on any one account.  Agencies that service large, high-volume clients will NOT be able to service most clients because the agency relies on “cherry-picking” accounts from high-volume clients.  Clients that have relatively little collection volume find that their accounts have low priority with many agencies, and so service of the accounts is usually minimal, with poor results.  Unless you have several thousand small-balance accounts to assign, avoid high-volume collection agencies.

“Do you customize your letters, or are they pre-formatted?”

Most agencies mail pre-formatted, computer-generated letters to your debtors’ last known address, and will NOT customize any letters.  The agency hopes the debtor will respond to such bland correspondence, but the majority of debtors will NOT respond to typical demand letters that the debtor can plainly see is a computer-generated, “fill-in-the-blank” letter.  Such generic letters carry little impact with most debtors.  Whereas, a letter that contains information about the debtor's assets and income, and is signed in ink carries strong impact.  Be sure to ask if the agency will custom-tailor collection letters for your particular debtors.

“Can I test your agency’s skiptracing skills?”

“Skip” accounts that have no current address or telephone number to reach the debtor will receive very little work effort to develop good contact information.  Since many “collectors” are merely low-paid telemarketers, they don’t have the knowledge or skill needed to track down an evasive debtor, or the debtor’s hidden assets.  Test the agency for its skiptracing ability by asking them to see if they can develop your Social Security Number, home address and telephone number using only your NAME to start with.  If the agency cannot do so, how can they be expected to find your skip debtors?

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