Skip tracing is when the collection agency will attempt to find and contact the debtor with the help of a variety of databases and public records. Many collection agencies can even utilize databases that are used by local and federal law enforcement agencies.
Credit Bureau Reporting- Collection agencies will report the debtor's unpaid balance as derogatory information to the proper credit reporting bureaus (there are different credit bureaus for individuals and companies). This information stays on a credit report for up to seven years, and is done to provide leverage in collecting the outstanding debt. Since this information may impact a debtor's credit score and his or her ability to obtain credit, it provides an incentive to settle the debt and have the item deleted from their credit report.
Attorney Forwarding- If the debtor does not respond to the collections process and/or refuses to settle the debt, the collection agency can forward the case to an attorney. The attorney is usually affiliated with the collection agency somehow, or might be part of a network of attorneys that the collection agency uses. The attorney will send the debtor a demand letter and will follow up with the debtor in an attempt to make payment arrangements. The attorney will then report the results of their contact with the debtor to the collection agency and will recommend either a lawsuit or closure of the file due to the likelihood of being paid. In the event that a lawsuit is initiated, the customer (you) will be responsible for all filing fees, process server fees, and any additional fees that are associated with the litigation. You will also owe a commission on the final amount collected through the legal action but if the file is closed prior to litigation, no additional fees will be charged to you.
Post-judgment Debt Collection- Once you have won a court judgment, it does not mean that the debtor will pay the money that is due. Most often, this judgment will have to be enforced This can entail a long process of tracking down assets, bank accounts, garnishments, and other forms of payment. Some collection agencies will utilize high-tech methods to locate these assets and then take the necessary steps to attach the debtor's bank accounts, seize their assets, or place liens on their property to satisfy your judgment.
Payment Methods Accepted- By having collection agencies make it easier for debtors to make outstanding payments, the odds that they pay you are increased. However, checks can be cancelled prior to clearing, and credit cards can be charged back, so make sure there is a process in place to verify that payment has cleared before the account is closed as 'paid' and a collection fee is paid to the collection agency.
Accounts Receivable Outsourcing- Some collection agencies offer outsourced accounts receivable services to complement your company's normal billing process. This can help reduce your company's staffing costs in some cases and it is usually priced on a per-account, per-month basis.
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