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  • Writer's pictureFair Capital

Questions to Ask Before You Hire a Debt Collection Agency

Updated: Jun 30, 2023

If you are looking to hire a debt collection agency, make sure that to hire the best.

We know what goes into being a top debt collection agency, because we strive to be the best. The following guide will provide you with information on what to look for when choosing a debt collection agency.

Do they report to credit bureaus?

Qualified debt collection agencies, such as Fair Capital, report data to the major credit bureaus, such as Equifax, TransUnion and Experian.

There are many debtors who will pay off their debt just to protect their credit score, since debts can adversely affect a person's credit score for up to seven years. Thus, you are more likely to be able to collect your debt if you hire a debt collection agency that reports data to credit bureaus.

Will the agency handle your "skip-tracing" needs?

It is not uncommon for debtors to disappear. Thus, good collection agencies use what is known as "skip tracing," which means they have access to various databases that allow them to locate a debtor who has left no forwarding address. Skip-tracing is especially important if you've been personally contacting your debtor and have been routinely ignored.

skip tracer

Are they Associated?

It's a good idea to ensure the agency is a member of an industry association such as ACA International. The ACA International is the largest debt collection association that ensures its members perform professionally and ethically.

Are they up-to-date with compliance and licensing?

Many states require debt collection agencies to be licensed in the state where they operate. In addition, several states require that agencies be bonded. Therefore, you should ensure that your debt collection agency is appropriately licensed and bonded before working with them.

What tactics will they use to collect your debt?

Your reputation is paramount, and you want to ensure the debt collector you hire doesn't use collection methods that may harm your reputation. A professional debt collection agency should be able to collect your debt without using toxic methods.

For medical providers, verify if they are HIPAA compliant

If you want to hire a debt collection agency to collect unpaid medical bills, verify if the agency is HIPAA compliant. The Health Insurance Portability and Accountability Act (HIPAA) sets the standard for sensitive patient data protection. Those protocols should be obeyed by every collection agency engaging in medical debt collection.

What is their fee structure?

Most debt collection agencies operate on a contingency basis nowadays. In other words, you will have to pay a percentage of the money they successfully collect. Fees typically range from 25 to 40 percent of the amount collected.

With a flat fee, you'll pay a fixed fee upfront, regardless of whether the agency is successful in collecting your debt. The flat fee is generally $15 to $25 per account.

Do they have a high success rate?

It is more important to consider a debt collection agency's success rate than its fee. The benefits of paying more for a collection agency with a high recovery rate outweigh the disadvantages of paying less for an agency with poor results.

Do they provide an online portal?

24/7 online access to your account is not a luxury, and your collection agency should give you access to an online portal with the ability to upload, monitor and generate reports quickly.


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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