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  • Writer's pictureFair Capital

How Much Do Collection Agencies Charge?

Updated: Dec 28, 2023

Before diving into the topic of debt collection costs, let us first acknowledge that there are two primary pricing models in this industry. On one hand, we have the contingency fee structure, and on the other, there's the flat fee model.


Through this guide, we'll shine a light on the key differences between the two dominant pricing structures in the debt collection industry – the contingency fee and the flat fee. We'll delve into the benefits and drawbacks of each, equipping you with a broader understanding to aid in your decision-making process. And most importantly, we'll provide clarity on what exactly a debt collection agency might charge you, regardless of whether you opt for a contingency fee or a flat fee model. So, let's roll up our sleeves and dive in!

Debt Collection Fee. How Much Does It Cost to Hire a Collection Agency?

Collection Agency Costs:

How Much Does It Cost to Hire a Collection Agency?


Contingency Fee

Most debt collection agencies, including Fair Capital, operate on a contingency-based arrangement, often called "No Payment, No Fee." A debt collection agency charging on a contingency basis will be entitled to its fee only after successfully collecting your debt.


For example, suppose a landscaping company that's owed $10,000 and engages a collection agency at a 20% contingency fee. Once the agency successfully recovers the debt, the landscaping company receives $8,000. The remaining 20%, or $2,000, is retained by the agency as its commission. However, should the agency fail to retrieve the debt, the landscaping company doesn't owe any fees to the collection agency.


How much can you expect to pay? Generally, the fee falls between 20%-40%, influenced by several factors:

  • Age: Older debts, being trickier to collect, tend to incur higher fees.

  • Balance: Small-balance accounts often attract a higher fee due to the relatively lower profit margins for the agency.

  • Volume: Bulk accounts could help you negotiate lower fees.

  • Industry: The nature and performance of different industries could impact the fees.

  • Pay Only for Results. The most significant advantage of using a contingency fee arrangement is that you don't have to worry about paying the collection agency unless they successfully recover your debt.

  • Maximum Results. You can rest assured that a contingency-based collection agency will give its utmost to your accounts. Because they don't get paid unless you get paid, the agency will be highly motivated to do everything in its power to bring you the best possible result. This may also provide some peace of mind–if a collection agency is willing to risk not collecting a fee for the work they put into things, you probably have a good chance of retrieving your debt.

  • No Up-front Fees. An additional advantage of using a collection agency charging on a contingency basis is that you don't pay anything while your debt is still outstanding.



Flat Fee


Alternatively, some agencies charge a fixed, one-time fee, typically between $15 to $25 per account, irrespective of the debt recovery outcome.


When hiring a flat fee debt collection agency, be careful of agencies that may try to charge you twice for their services. Often, these agencies may offer a flat fee for minimal pre-collection or soft collection services that do little or nothing to recover your debt. They will then ask you to upgrade to a full-scale contingency fee collection service, resulting in you paying both a flat fee plus a contingency fee.


Performance Over Price

It's essential to note that when hiring a debt collection agency, pricing is not the only factor to consider. In fact, the performance and successful track record of a collection agency are more critical in ensuring a positive outcome. Opting for a low-priced collection agency that produces inadequate results can prove to be a costly mistake in the long run. It's advisable to invest in a reputable and proficient collection agency, even if their fees may seem relatively higher, as their results will save you money and instill confidence.


In conclusion, it is important to understand a debt collection agency's pricing, structure, and fees to determine which agency to hire. At Fair Capital, we offer a transparent pricing structure that clearly outlines our fees, making it easy to understand exactly what you will be paying.

With our unique and advanced approach and a strong track record in debt recovery, Fair Capital is a reliable and trustworthy choice for your debt collection needs. Don't let the stress of unpaid debts weigh you down any longer – hire Fair Capital to handle your debt collection and get the money you are owed.



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1 Comment


Fair Capital
Fair Capital
Sep 19, 2021

How Much Does it Cost to Hire a Collection Agency?

The average contingency fee ranges from 25% – 35%

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Disclaimer: Any and all information is not intended to be, nor is it, legal advice. Please consult your attorney for information concerning allowable rates of interest.

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