As a debt recovery lawyer, I understand my clients’ concerns when it comes to their debt settlement options. One such concern would be the perceived high charges of hiring a debt recovery lawyer, causing some to turn to a debt collector instead. However, you should be aware of certain considerations before turning to a debt collector.
Before we go into that proper, perhaps it would be useful for me to explain what is considered a debt recovery case in the first place. You might be surprised to know that not all claims for money are debt recovery claims.
What is a Debt Recovery Case?
A debt recovery case is one where there is a clear-cut debt owed. Examples of this include a friendly loan (“IOUs”) or where you are a supplier being owed money for goods you have delivered.
On the other hand, if it is a breach of contract case where the other party is disputing whether it even owes you money, then this cannot be considered a debt recovery case.
Now, let me explain why hiring a debt recovery lawyer may be a better option than turning to a debt collector.
1. A debt recovery lawyer can give you a practical assessment of your case
A practical assessment of your case is of utmost importance because it will help you in determining your options and planning your next moves wisely.
While the usual mode of debt recovery is to send the debtor a letter of demand (LOD), followed by a Writ of Summons if the debtor does not pay up, and then obtaining a court judgment for the debt to be enforced on the debtor, the best strategy ultimately depends on your specific situation.
For me, I make it a point to provide a quick, fast and specific assessment of my clients’ situations to enable us to decide on the best course of action.
One of the most crucial considerations is whether the debt is even worth recovering, by relying on the concept of Return of Investment (ROI). This basically measures the amount of returns you get, relative to the costs of obtaining that return.
If, for instance, commencing legal proceedings will be too prohibitive in terms of costs, bearing in mind the amount of debt you are claiming, it may not be wise to commence legal proceedings to recover your debt.
Therefore before you hire a debt collector to collect on your debt, consider hiring a debt recovery lawyer. He or she will be able to go through with you the relevant considerations and options, and advise on the best strategy for you.
2. Better transparency of fees
My fee structure for a debt recovery case is straightforward and transparent – a fixed fee for each stage.
This way, you as a client can be assured of the fees and have one less worry while trying to recover your debt. I do not charge hourly rates since I have a thorough understanding of the extent of work required for debt recovery cases and can confidently estimate how much I should charge for the entire process.
On the other hand, debt collectors usually charge on a percentage basis of the debt to be collected. Some debt collection agencies also charge a significantly higher rate of commission for older debts while others may take payment upfront. This has caused unhappiness and problems as some debt collectors disappear after receiving payment, resulting in little or none of the debts recovered.
If you would prefer to hire a debt collector, I would recommend that you find out how their fees will be pegged and ensure that their fee structures are transparent.
3. Hiring a debt collector can be risky
As a client, you certainly want and need a reliable party to help you recover your debts, and this includes the debt collectors you may hire. Thus, you should be aware of certain risks that may come with hiring debt collectors. While there are no specific laws regulating debt collectors, certain acts debt collectors may carry out to recover a client’s debt may be against the law.
In fact, just last year, a debt collector and his 6 accomplices who created a ruckus at a Funan DigitaLife Mall food stall were jailed after being convicted for several offences, including unlawful assembly to commit harassment and mischief with common intention.
Their acts of mischief included one member kicking a rice cooker and shoving a cash register onto the floor. Another member even threw various food items into a large pot of soup, spoiling the soup.
How would this affect you, the debt collector’s client?
If debt collectors were to run into trouble with the law, it would cause more hassle and inconvenience for you to recover your debt. As alluded to earlier, debt collectors may face jail terms and hefty fines for illegal conduct. If your debt collector is jailed, the process of collecting your debt may be delayed.
Additionally, you run the risk of incurring liability for hiring the agency in the event you are sued for the agency’s acts. This is unless – and you should verify this before hiring the debt collector – the debt collection agency has taken out Errors and Omissions Insurance to indemnify you.
Hopefully after reading this, you now have a better understanding of what hiring a debt recovery lawyer or a debt collector entails. It must be stressed that being careful with your options is of utmost importance since you will want a smooth and efficient debt recovery process. Thus, it is recommended that you do a thorough consideration before deciding on whether to hire a debt recovery lawyer or debt collector.
Feel free to contact me if you have any further enquiries. I will be more than pleased to assist you.