| Collection agencies are businesses that collect | | | | to collect debt: |
| past-due bills and accounts receivable for other | | | | 1) Letters. |
| persons or businesses in exchange for a fee. | | | | 2) Direct contact via the telephone. |
| Collection agencies charge for their services one | | | | 3) Litigation. |
| of three ways: | | | | Typically, collection agencies begin the collection |
| 1) A flat fee. | | | | process by sending a series of notification letters, |
| 2) A percentage of what is collected. | | | | often called demand letters. The final notification |
| 3) Through a direct sale of the delinquent | | | | letter generally warns the debt dodger that if the |
| accounts. | | | | past-due account is not paid by a certain date, his |
| If you are trying to collect a small or medium | | | | or her name or company will passed on to more |
| sized debt, using collection agencies that charge a | | | | intensive collections. |
| flat fee are probably your best option - collection | | | | Many collection agencies also pay their staff to |
| agencies that charge a flat fee work just as hard | | | | phone the debtor directly. This direct contact is |
| to collect a small debt as they do to collect a | | | | most useful in turning up the heat on debtors who |
| large debt. | | | | have identified themselves as having no intention |
| If you have just a few large unpaid receivables, | | | | to pay their bill. |
| working with collection agencies that charge a | | | | Litigation -- in small claims court or a full-scale |
| percent of the total debt collected is a wise | | | | courtroom -- is a final option. |
| choice. (usually 25 to 50 percent). | | | | Besides sending out letters and making phone |
| The third option, selling your uncollected | | | | calls, some collection agencies also specialize in |
| receivables at a discount to certain collection | | | | locating debtors who can no longer be reached at |
| agencies is advisable only if you have a very large | | | | the address or phone number listed on their |
| amount of debt - usually $1 million or more. The | | | | accounts. To determine whether certain collection |
| selling price is typically a minuscule 2 to 8 cents on | | | | agencies offer this service, ask them about their |
| the dollar. | | | | "skip tracing" abilities. |
| Most collection agencies use one of three tactics | | | | |