Choosing a Debt Collection Agency or Debt Collection Solicitor
Debt collection can be a serious problem for businesses of all sizes in Ireland. The pressure that unpaid debts can put on cash flow can be detrimental to a business where no action is taken. Both debt collection agencies and debt collection solicitors can be used to recover debts. If a person owes you money they are classed as your debtor and you are entitled to ask them to pay their debt to you, many people will do so through phone calls, emails, letters and meetings. In times where these efforts do not produce any result, it may be time to consider engaging a debt collection professional to help you get paid faster, but who do you choose to collect your debts – a debt collection agency or a debt collection solicitor?
For many businesses, the most obvious choice is to do a google search for a ‘debt collection agency’ and look through the top results. It is important to know who you are talking to as this may have an impact on how quickly you will recover your debt.
Debt Collection Agency vs Debt Collection Solicitor
Legal vs non-legal debt collection
A debt collection agency is not a law firm and will only be able to deal with the pre-legal recovery of debt. What most people don’t realise is that a debt collection agency will employ the same tactics that the company will have tried themselves before contacting the agency. Pre-legal recovery of debt involves demand letters and communication with your debtors to coax them into paying their debt to you.
Pre-legal debt recovery does not always work and legal action may be required to recover the debt. As soon as you come to this point in the debt collection procedure you will need to instruct a solicitor to start the legal debt recovery process. Having a solicitor start the process from the outset can save you time and money and help you get paid faster.
Complexity of the debt
Turing to a debt collection solicitor from the outset can help you recover your debt faster. A solicitor will hold all the legal knowledge you need as regards whether the debt is worth pursuing, any potential legal complications down the line and will be able to navigate this process in a way that ensures that any legal complexities are addressed from the outset. A debt collection agency may not have this knowledge meaning that your debt collection may be delayed.
A Law Firm’s Demand Letter may have a greater impact
Step one of the debt collection process involved the sending of a demand letter to your debtor, this will happen regardless of whether you engage a debt collection agency or solicitor. In many cases, the debtor may take a solicitors letter more seriously than that of an agency in the knowledge that a solicitor can take the case one step further and issue legal proceedings. In some circumstances, the chances of receiving payment from a demand letter may be higher when sent from a solicitor.
Debt Collection Fees
Debt collection agencies often charge high commission rates on the recovery of the debt, meaning that what appears to be inexpensive at the outset can work out to be quite expensive once the debt is recovered. Agencies can charge commission in excess of 40% in some cases, meaning that once your debt is recovered a considerable amount of this will be paid in fees.
A debt collection solicitor, like Carlisle Solicitors, ensures that your debt is handled quickly and efficiently and a low commission has an impact on the amount you will ultimately recover, meaning that you can recover more with Carlisle.
Debt Recovery Rules
All debt collectors (this includes debt collection agencies and debt recovery solicitors) are subject to regulation. Ensuring that the company you decide to handle your debt is aware and abides by these rules is paramount in ensuring that you get paid faster.
As per Section 11 of the Non-Fatal Offences against the Person Act, 1997, a debt collection company (agency or solicitor) is guilty of an offence if they make a demand for payment and:
- The demands are so frequent that the debtor or their family member is subjected to alarm, distress of humiliation, or
- The debt collector falsely informs the debtor that they are authorised in some official capacity to enforce payment, or
- The debt collector falsely informs the debtor that criminal proceedings will be issued if the debt is not paid.
In cases where a debt collection company use such tactics, the matter can be reported to the Gardaí and payment of your debt can be substantially delayed and you need to be sure that any agency you engage is not going to put you at risk.
Get Paid Faster with the Legal Debt Collection Process
By instructing a specialist debt recovery solicitor, such as Carlisle Solicitors, you can avoid some of the pitfalls above and get paid faster!
Step 1: Contact a Carlisle Solicitors Debt Recovery Team
Gather as much important information as you can about the person that owes you money so that your solicitor will have all the information needed to pursue and recover your debt. The information that you should provide to your solicitor will be:
- Company Name
- Registered Address
- Contact Information
- Date of birth (if you are a sole trader)
- Occupation and place of business
- Amount of money owed to you
- Updated statement of account
If you are having issues gathers each of the above pieces of information, gather as much as you possibly can and then contact a solicitor.
Step 2: 7 Day demand letter
Once your solicitor has all the relevant information from you, they will proceed and issue a 7-day demand letter to your debtor, demanding that the debt be paid within 7 days or legal proceedings will follow. In some cases, having a solicitor send a demand letter can be enough to persuade the debtor to pay the debt, or at least engage with you. In cases where a debtor ignores a demand letter then you can move forward and issue legal proceedings to recover the debt.
Step 3: Obtaining Judgment to get paid
If the case moves forward to legal proceedings a judgment must be obtained first. Judgment and resolution of the debt can be obtained in two ways;
- If the debtor does not respond to legal proceedings then you move straight to judgment
- If the debtor does respond and would like to defend the case then a hearing in court will be the next step.
In either case, your debt recovery solicitor will be on hand every step of the way to make sure that you understand each step of the process.
Step 4: Enforcement
Once a judgment has been issued the next step will be to enforce the judgment so that you get paid. There a number of different ways in which enforcement can take place. Discussing these options with your solicitor will be your next step here so that together you can take the right step forward in getting you paid faster.