Reputable Collection Agencies?
April 27, 2005 12:04 PM   Subscribe

I did some freelance work for a company last year and have a number of unpaid invoices. It's been too long, it's time to cross over to Bad Guy. Unfortunately, I'm a terrible Bad Guy, so I need someone else to do it for me. Does anyone know of a reputable collection agency? How does one evaluate them?
posted by o2b to Work & Money (15 answers total)
If you don't have a pre-existing contract with a collection agency, it is likely you will find their collector's fee more costlier than a small claims court suit. From there, with an unpaid small claims court judgement against them, you can, IIRC, become collector and ensure the unpaid judgement goes on their credit record yourself at that point.

Of course, if you're paid, well, worries are over, as long as you only deal with them on a cash-only pre-paid basis.

I remember spending about $50 to collect $75 from someone (it was more a punitive DON'T EVER COME TO MY STORE AGAIN collection than trying to get money from the guy... let's just say an axe was involved and leave it at that).

From what I recall you'll pay about 15% - 25% of the collected amount to the collection agency in fees.
posted by shepd at 12:17 PM on April 27, 2005

Small claims court isn't an option (it's well over the limit).
posted by o2b at 12:26 PM on April 27, 2005

I don't care how terrible you are playing the bad guy, but you gotta do it. It isn't worth it to go down the collection route unless you've really tried to get the money yourself. Call every day at the same time. Write a letter or two or three (certified.) Demand payment and after a few weeks of this BS, write them telling them you're going to have to unfortunately take them to small claims court and require upfront payment from now on (if you were planning on ever taking a job from them again.)
posted by pwb503 at 12:27 PM on April 27, 2005

The one time I was worried about getting stiffed on a job (only about a month past due, but the guy seemed a little too slick), I looked into using a collections agency (Dun & Bradstreet). IIRC, they take 30-40% off the top. Then I contacted the client and told him that I was concerned about his late payment, and was considering retaining a collections agency.

Check arrived next day by fedex.
posted by adamrice at 12:35 PM on April 27, 2005

Small claims court isn't an option (it's well over the limit).

You should be able to go into small claims court by asking for less than the full amount due (i.e. the court limit). When compared to the collection agency's cut, the numbers may not look so bad.

Also, sometimes the very act of being served with the lawsuit is enough to get a person properly motivated. If you have good evidence of the debt and believe that he cares about his credit record, then filing = leverage. When he has to compare the option of (A) being forced to pay less than 100% but also having a negative judgement on his credit report for the next 10 years versus option (B) paying in full now to get you to drop the case...*cough*

There is also a class of lawyers who do debt collection. They're sort of part collection agency, part law firm. They can file suit for you if necessary, but part of what they bank on is that a standard collection letter printed on the law firm's letterhead is enough to scare many people into quick payment. But you don't have to hire a debt specialist. You can pay any attorney to send a collection request letter on their letterhead. It'll take them 15 minutes to print the boilerplate and stuff it in an envelope, while you'll probably get charged for 1 hour paralegal plus 1 hour lawyer. BUT if you can put that one good scare into him isn't it worth it to get a fast, effort-free payment? Pursuing the debt either through court or collections is going to take much more time.
posted by nakedcodemonkey at 1:32 PM on April 27, 2005

Take it from a lawyer who does collections work: collections agencies are a waste of time for the type of debt you are talking about. Go directly to a lawyer. The good ones have ways of making it cost effective.
posted by madandal at 1:42 PM on April 27, 2005

If you haven't been calling them often, you should really wait to pursue any extraneous means to recover the money. It sounds like you may not have even contacted them at all about it, and just expect payment because of the existance of the invoices. This, of course, is hard to tell since you haven't provided that information.

You're not being the bad guy. You are owed money, and need to be paid. It's called business.
posted by angry modem at 1:59 PM on April 27, 2005

I've been in constant touch with them -- they know about me. The CFO knows about me, the President knows about me.

So, in accordance with madandal's advice -- does anyone know a lawyer in NYC? Preferably a bruiser who does debt collection and has time?
posted by o2b at 2:17 PM on April 27, 2005

If you go after them yourself you have a big advantage being the original creditor. Most of the FDCPA doesn't apply to you. If you're in NYC a collections agency has to be licensed and bonded, I believe, which is going to mean more of a percentage for them.

Your best bet for getting collection is to report them to credit agencies, particularly if you can pin this on an individual - their willingness to pay will likely increase when it turns into real money out of their pocket because of higher future mortgage costs or all their credit cards in the present. Just make sure you comply with the FCRA to the letter.

Sooner or later it'll impact them and they'll want it off their report and you can agree to not validate when they challenge its veracity with the credit agency (you have to report accurately but there's nothing requiring that you REPORT) if they pay.

In the longer term make sure you don't piss about too long - debt has a statute of limitations as well and after a certain point you no longer have any legal recourse for collecting.
posted by phearlez at 3:47 PM on April 27, 2005

I've been in constant touch with them -- they know about me. The CFO knows about me, the President knows about me.

I stand corrected!
posted by angry modem at 4:31 PM on April 27, 2005

What adamrice said. If, in your dealings with these jerks, you haven't yet mentioned that you are *considering* retaining a lawyer and/or collection agency, that should be your next step. Whether you want to bother telling them that before actually contacting a lawyer/collection agency is another question, but wielding the threat explicitly is the very least you should do next.
posted by mediareport at 7:02 PM on April 27, 2005

I would find a friendly lawyer and have them write the company a demand letter. (The nolo web site says you can do this yourself, but given the circumstance I think it would be much more effective coming on an attorney's letterhead.)
posted by alms at 7:21 PM on April 27, 2005

Richard Klass, Esq.
16 Court Street, 29th Floor
Brooklyn, NY, 11241
Work: (718) 643-6063
Fax: (718) 643-9788
posted by madandal at 10:23 PM on April 27, 2005

You definitely want a lawyer who specializes in collections. Don't hire a regular litigator or business lawyer. Collections is its own nasty world.

Also, the collections lawyer might take the case on a contingency--say 25-30% of whatever is collected.
posted by Mid at 6:08 AM on April 28, 2005

Part of the reason you need someone who really knows collections is because getting a judgment and actually *enforcing* a judgment are two different things. Any lawyer can get you a judgment if the debt is as clear as you say. Enforcing the judgment, however, moves into the world of actually seizing assets--like garnishing a bank account or having the county sheriff seize their property. That is very specialized stuff. Make sure whoever you hire has experience in that sort of thing.
posted by Mid at 6:13 AM on April 28, 2005

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