Understanding 'No Recovery, No Fee': Contingency Fees in Debt Collection
Updated: Aug 25
What is a contingency fee in debt collection?
A contingent fee agreement is a fee structure that allows debt collection agencies to be paid a percentage of the debt they collect rather than a flat fee.
In a contingency arrangement, a collection agency agrees to work on your account without charging you any fees upfront. In return, the collection agency will keep a percentage of the money successfully collected for themselves.
Contingency fees typically range from 20% to 50% of the collected debt. However, a collection agency will not charge you if they cannot collect your debt.
While a debt collection agency does not charge their fees until your account is paid, a creditor may still be responsible for some up-front costs. For example, a creditor may be responsible for legal and court filing fees if they wish the collection agency to pursue legal action on their behalf.
Key benefits of contingency-fee debt collection
No Upfront Cost: Contingency fee arrangements have the advantage that you don't have to pay your debt collection agency upfront. Meaning you don't pay anything while your debt is still unpaid.
No Money, No Fee: Using a contingency fee arrangement also means that you won't have to worry about paying the collection agency if things don't work out.
Maximum Effort: Whether it is a consumer or commercial debt collection agency. You can expect the agency to do everything in its power to recover your overdue account receivables. When a debt collector does not get paid unless you get paid, they are highly motivated to bring you the best possible result.
You can Relax Confidently. The fact that a collection agency is willing to risk not getting paid unless they recover your debt is something you may find reassuring.
To meet our clients' needs, Fair Capital offers the most reliable debt collection services for a low contingency fee. Click on the link below to request a free quote.
What is the average collection rate for a collection agency?
