Last Updated: April 27, 2023

Compare Using a Collection Agency vs Hiring an Attorney Costs message: Let us do the work for you. Answer a few short questions & get cost estimates for your needs from trusted collection agencies who service your area. Our service is 100% free!

Collection Agency Overview

When business owners can’t get a customer to pay up, despite repeated letters and phone calls, many turn to a collection agency. Professional collectors also rely on letters and phone calls, but they have specialized software and phone systems to bring efficiency to the debt collection process. In all likelihood, your debtors will take communication from a collection agency more seriously than communication from you.

Collection agencies vary in size and focus. Some are small and local, while others are large, national operations. Some specialize in certain types of debt, while others are more general in focus.

Using a Collection Agency Cost

Most collection agencies charge for their services by taking a percentage of the debts they collect. Fees range anywhere from 20 percent to 50 percent. The older the debt, the higher the fee will be because old debts are notoriously hard to collect.

Some collection agencies also pass on charges they incur in the process of collecting your debt, including long distance charges or fees for background checks. Make sure you ask for a complete list of fees before hiring any collection agency.

Using a Collection Agency Pros

  • Better option for smaller debts - As a general rule, it’s probably not worth hiring an attorney if you’re owed less than $5,000. It’s better to hire a collection agency or go to small claims court. However, keep in mind that most collection agencies require a minimum amount of debt to take you on as a client.
  • Less hassle - When you turn a debt over to a collection agency, collecting the money becomes someone else’s responsibility. You can forget about the issue for a while. When you hire an attorney, there are meetings and court appearances to attend, as well as evidence to collect.

Using a Collection Agency Cons

  • Always comes at a cost - Collecting a debt will always come at a cost when you use a collection agency. The agency will take a portion of the money it collects in fees. When you hire a lawyer, there’s a chance the judge will require the debtor to cover your expenses, including legal fees.
  • May not be taken seriously - Some debtors will simply ignore letters and phone calls from a collection agency because there’s no threat of legal action.

Compare Collection Agency Rates

Fill out our 30 second free form to receive competitive pricing from pre-screened collection agencies. No commitments. Our service is always free!

Hiring an Attorney Overview

Hiring a lawyer is another option when you have bad debts to collect. Typically, you’ll want to hire a lawyer who specializes in debt collection. Some people turn to a lawyer only after a collection agency has failed to collect a debt; however, you can also skip the collection agency altogether and go directly to a lawyer.

A lawyer who specializes in debt collection will begin by sending out a set of collection letters as mandated by law, unless a collection agency has already done so. Then, if there’s no response, the lawyer will file a lawsuit in court.

Hiring an Attorney Cost

Most people assume that hiring a lawyer is more expensive than hiring a collection agency, but that isn’t always true. When you go to court, you can sue a debtor for legal expenses in addition to the original amount owed. If you’re successful, you won’t spend a penny trying to collect the debt.

In general, lawyers charge an hourly fee for debt collection services. However, in some cases, lawyers who specialize in debt collection will charge a percentage of the amount collected. Be sure to find out in advance exactly how you will be billed.

Hiring an Attorney Pros

  • Cheaper -- if you win the case - If you sue for legal expenses in addition to the original debt - and if you’re successful - hiring an attorney will cost you little or nothing. You won’t have to sacrifice a portion of the amount owed, as you would with a collection agency.
  • Customers more likely to pay - Debtors who ignore calls and letters from a collection agency might be scared into action when they receive a letter from an attorney. Many people take the threat of legal action more seriously.

Hiring an Attorney Cons

  • Time consuming - When you decide to take legal action, the process can be long and involved. Plan to set aside time for meetings with your lawyer, evidence collection and court appearances.
  • Not ideal for small claims - If the amount you’re owed is relatively small - say less than $5,000 - it’s probably not worth the time and expense of hiring an attorney. You’re better off hiring a collection agency or taking the case to small claims court without legal representation.

Find Local Collection Agencies Who Will Compete for Your Business

Compare Collection Agency Rates

Fill out our 30 second free form to receive competitive pricing from pre-screened collection agencies. No commitments. Our service is always free!