When Should I Hire a Debt Collector?

Debt collection is never any entity’s first choice. When you provide goods or services to a client, customer, or other party, you have an expectation that you’ll get paid. You would not have entered into the business relationship had you known that the debtor would be unwilling or unable to pay. Waiting on a debt takes time, effort, and resources away from your capacity to carry on with your normal practice. At what point should you take matters further and hire a professional debt collector? Continue reading for a discussion of debt collection and when to hire a firm to handle collections for you. If you’re dealing with a customer or client who has failed to pay for your products or services, call a Houston debt collection attorney for advice and representation.

Considerations Before Hiring a Debt Collector

Before you hire a debt collector, you need to evaluate the pros and cons of doing so. There’s more to the equation than “my customer is past due on their payments.” Depending upon your risk profile, your need for the money, and other factors, you might wish to put off hiring a debt collector until necessary.

Considerations that can factor into your decision include:

• The amount of the debt. If your customer owes you thousands or tens of thousands of dollars, it might be worth hiring a debt collector. If the amount owed is much smaller, it might not be worth the collector’s fees or any ill will that could be generated through the use of a debt collector.

• How urgently you need the funds. If the debt is important to your business–if they’re a major customer and your solvency depends even in part on getting repaid–you’ll want to hire a debt collector sooner rather than later. If, however, the debt is small and will not make or break your business, you might want to weigh other options, including giving the customer additional time to pay, agreeing to a payment plan, or even settling for less than the total amount.

• Your relationship with the debtor. If you have a healthy and historical relationship with the debtor, you’ll have a better understanding of whether they can pay as well as how much your reputation with that debtor matters. If they are another business with whom you have a long, profitable relationship, it could be worth waiting to engage in any aggressive debt collection efforts, lest you damage that relationship or negatively affect your relationship with them. You may wish to conduct an investigation first, including having a frank discussion with them about their recent payment issues. If, however, you don’t have any interest or need for further business with this debtor, then you might want to go ahead with debt collection as soon as possible.

• The debtor’s history of payment (or non-payment). If the debtor has a history of paying on time and in full, you might want to give them the benefit of the doubt. You could engage in conversation to try and root out the problem. If this debtor has had trouble paying in the past, however, and they have taken advantage of your good will on prior occasions, you might want to hire a debt collector this time around and get what you are owed.

• The customer is stalling or avoiding you. If the customer is dodging your phone calls or continually pushes off discussion of the debt they owe, it could signal that they are never planning to pay you back or are at risk of disappearing. The same logic applies if they promise to pay on a specific date and keep missing the mark.

• How long has the debt been overdue? You likely don’t need to hire a debt collector the day after a payment is due and goes unpaid. If it’s been more than 90 days and you’ve heard nothing about payment, it’s probably time to hire a collection agency, given other considerations. If you wait too long, you could even lose out on your right to collect.

Discuss the matter with a business law and debt collection attorney to evaluate your options. If you have a strong need for the funds and other considerations do not counsel against hiring a collection agency, it’s better to start the process as soon as possible.

If you need assistance with debt collection or any Texas business law matter, contact a professional and diligent Texas business law attorney at Leigh B. Meineke Law Firm by calling 832-706-0244.