It’s a sad reality, but sometimes customers just have no intention of paying you. There might come a time when you have exhausted all possible resources—when you have sent numerous letters, called countless times and maybe even met in person—but all to no avail. The account continues to be delinquent and each and every day it seems more and more likely that your money will be lost forever. If this is the case, it might be time to bring in the big guns, to enlist those infamous suited figures in the back room—it might be time to hire a debt collection lawyer.
When Your Small Business Should Call In a Debt Collection Lawyer
Simply by their presence, lawyers can be pretty effective in getting people to pay. Just the threat of going to court has the potential to incite people into action. Thus, before you hire a lawyer, it is a great idea to enlist his or her counsel and services in writing a demand letter for you (if, of course, the one you wrote before didn’t do the trick). As Justin Tenuto from Rocket Lawyer points out, “Sometimes, a professional correspondence from a practicing attorney will motivate your debtor to pay up. After all, debtors don’t want to end up before a judge, explaining their motives for not paying you.” You can sometimes even find a lawyer to do this for quite cheap (such as from Rocket Lawyer), but it is also a good idea to go with someone that you can develop a relationship with, just in case you want to pursue the matter further.
To Hire or Not to Hire?
If you do in fact have your sights set on fully enlisting a debt collection lawyer, you first have to run a cost benefit analysis to make sure this move makes financial sense. Debt collection lawyers are expensive and you don’t want to end up paying more for their services than you actually are trying to recover in the first place. The last thing you want to do is lose more money on this whole situation. Therefore, when deciding whether to go the legal route, access the financial viability of each option. If the account is very large and you can get a good chunk of it back even on top of the lawyer’s fees, then it might be a good idea to go ahead with the decision. Alternatively though, to hire a debt collection lawyer, you have to be willing to take your customer to court. If not, getting a debt collection lawyer might not be the best path.
Choosing the Debt Collection Lawyer for You
You should always do your research before committing to anything, and choosing a debt collection lawyer is no exception. It’s hard to imagine, but there are many different types of debt collection lawyers, specializing in a variety of areas. So, just like in choosing the right small business bank, you should also hire a lawyer that has experience with the specific situation you are struggling with. Dive a little deeper to figure out exactly what the qualifications are of a specific lawyer. Speak to references, examine track records and ask about strategies. Do what it takes to determine whether this lawyer is the one for you and the type of debt you are trying to recover. Remember that you have to balance the cost of the lawyer with the actual money you are trying to recover, so choosing the right lawyer definitely involves finding one with the right payment structure. After all, the whole point is to get paid.
Debt Collection Lawyer vs. Debt Collection Agency
You might ask yourself, why get a debt collection lawyer when I can just get a debt collector? While debt collectors are indeed an option, and often times less expensive than a lawyer, sometimes a lawyer is need for more difficult clients. Lawyers, as Attorney Jeffrey Curl explains, have a lot more flexibility and options of what they can actually do and how they can go about getting you your money.
The Last Resort
Debt collection lawyers are in fact the ultimate last resort. While there might be such a thing as a free lunch, there is no such thing as a free lawyer. Lawyers, as mentioned, are expensive and come at a hefty cost, a cost that will consequently cut into the money that you are trying to recover in the first place. Furthermore, getting lawyers involved definitely hurts the relationship you have with your clients, regardless of whether you want to do business with them in the future. For these reasons, lawyers should be the very last call, when everything you have done has failed to produce actual results.
This post was written by Arie Hefter.