Do I Need a Collection Attorney?
With increasing protections for debtors, the rules for creditors to collect debt have become stricter with severe punishment for violations of the Fair Debt Collection Practices Act, including monetary damages, attorneys fees, and more. Unfortunately, debtors’ may simply ignore your personal attempt so recover a debt as well as any collection agencies attempts. However, retaining a New Jersey collection attorney holds more weight and authority since it signifies that legal action may be imminent.
Should I Bother With a Collection Agency?
How does a collection agency work? Strictly speaking, collections agencies offer two services to their clients. They can send demand letters or repeatedly call the debtor and inform them that the debt exists. If the debt has not expired, they can place the account on a debtor’s credit report. Unless the collections agency has a debt collection attorney on staff, they cannot otherwise pursue the debt on your behalf.
Collection agencies specialize in sending demand letters to debtors, which are easily ignored and continues to delay your ability to collect the debt. Some collection agencies do offer legal services to their creditor customers but often charge a suit or an “activator” fee when legal action is necessary. Agencies may also have a contract period or required minimum number of placements, which again may delay your ability to quickly collect a debt.
If the account remains in collections for an extended period of time, the debt may expire while the debtor ignores the collection agency’s phone calls and demand letters. After this period, you will no longer have any actionable means of collecting the debt. At this point, you can sell the debt for pennies on the dollar to collections agencies that specialize in harassing people to collect zombie debt or debt that has passed the statute of limitations.
Why Retain a Collection Attorney?
Hiring a law firm specializing in debt collection has many advantages. At Snellings Law LLC, we are familiar with all the applicable laws to ensure that these laws are not violated while collecting the debt. By initially retaining a New Jersey collection attorney, we can save you time, money, and frustrations because:
- Evaluate the debtor and the debt: Prior to collection actions, we evaluate the legal collectability of your claim, including relevant statutes of limitations or weak documentary evidence issues that may compromise your claim.
- File lawsuits: Suits are promptly filed after a demand letter is sent and expiration of any statutory dispute period.
- Prepare your case: Prompt verification of the debt when disputes exist.
- Negotiate on your behalf: Reasonable and achievable debt repayment plans are negotiated and monitored for compliance. Repayment plans are encouraged where applicable to avoid the reduction or voidance of your claim during the debtor’s bankruptcy proceedings.
- Aggressively pursue your debt: If necessary, legal judgments against the judgment debtor are obtained and enforced by filing judgment liens and post judgment garnishment proceedings.
Unlike collection agencies, attorneys are subject to state rules of ethics and professionalism. They are also subject to sanctions by the court for improper handling of client’s affairs or funds. Any funds recovered are deposited into the firm’s IOLTA Trust Account, not into a business account where funds could be commingled.
What Tools Do Collections Attorneys Have That Collections Agencies Don’t?
Once a debtor’s debt is in default, a debt collection law firm will send a demand letter and then file a lawsuit against the debtor, if the debt is collectible. Once we have a judgment against the debtor, we can begin taking more aggressive actions to collect the debt. These include placing liens on their property, garnishing their wages, or levying their bank account.
If the debtor attempts to dispute the amount owed or the validity of the debt, we prepare your case before the judge. Meanwhile, a debt collections agency is prohibited from making any threat that they cannot make happen. This includes threatening a lawsuit against the debtor.
Debt collections attorneys obviously can threaten lawsuits, which tend to force the debtor into the position of either repaying the debt, negotiating a repayment plan, or filing for bankruptcy. In the event that the debtor files for bankruptcy, a debt collection law firm can ensure your rights as a creditor are considered during the bankruptcy proceedings.
A Debt Collection Law Firm Can Deal With Companies
When most people think about debt collectors, they think of people who harass you over the phone. Yet some of the worst debtors are actually companies, and the bankruptcy laws that apply to companies are quite different than those that apply to individuals.
A debt collection law firm can garnish a debtor-company’s bank account, force the sale of company assets, and attach liens to company property. A debt collection agency can’t do any of those things.
If a debtor-company files for bankruptcy under Chapter 7, your debt collection attorney will ensure that you are compensated as much as possible after the liquidation of the company is complete. If the company files under Chapter 11, we can raise objections to any repayment plan that doesn’t compensate you for at least some of the money you’re owed.
Debt Collection Agencies Lack Leverage
When you hand your debts over to a collections agency, that agency lacks a significant amount of leverage that is very useful for settling the debt. In fact, collection agencies cannot take any legal action without having an attorney manage that aspect of the process for them. They can’t even threaten legal action if they don’t have the means to carry it out.
In a typical collections case, the threat of a lawsuit is enough to force the debtor to pay up. We handle all interactions with the debtor and negotiate on your behalf. If the debtor continues to ignore their obligation to their creditor, we can apply more and more pressure. Once the court has granted a judgment against the debtor, we can begin placing judgment liens on their property, effectively turning an unsecured debt into a secured one.