Debt collection agencies can be an effective way to recover unpaid debts, but before you call them in, there are a few steps you should take.
Send a Written Demand Letter
Before you call a debt collection agency, you should send a written demand letter to the debtor. In the letter, specify the amount the debtor owes and request immediate payment. The letter may also include a deadline for the payment. This is important as it serves as proof that you've taken reasonable steps to recover the debt in case the case goes to court. If the debtor fails to pay within the specified deadline, then you can proceed to the next step.
Consider Using a Mediator
If you've tried contacting the debtor and sending a demand letter, the next step is to consider using a mediator. A mediator can act as an impartial third party in resolving disputes and creating an agreement between you and the debtor. This can help avoid the need for a collection agency and possible legal action. Mediation is also a cheaper alternative to court.
Choose a Reputable Collection Agency
If all else fails, and you've decided to use a collection agency, then select the best agency you can find. Research the agency carefully and ask for references. It's important to choose an agency that will act professionally and abide by the law. Also, make sure to read and thoroughly understand the service contract and fee structure.
Throughout the debt collection process, it's essential to document everything. Keep all communication and documentation of every step taken, including communications with the debtor and collection agencies. This evidence can be crucial in the event of a legal dispute.
The Bottom Line
In summary, there are several steps you should take before calling in a debt collection agency. First, send a written demand letter informing the debtor of their outstanding debt. Second, seek legal counsel to understand your legal rights and any legal risks involved in the collection process. Then, consider using a mediator before resorting to a collection agency. Finally, keep meticulous documentation of your communication and documentation throughout the entire process. By following these steps, you can ensure a smooth debt collection process that abides by the law and avoids any complications.
If you do decide to use an agency, then choose a reputable one and understand the fee structure before signing any contracts. And don't hesitate to ask them any questions, as they help you to recover that outstanding debt. Reach out to a debt collection agency near you to learn more.