Did you know that you sign a contract when you work with a debt collector?

What kinds of things do you need to agree on with a collections professional?

You want to make sure you have written contracts with your collections professionals. You may enter into contracts on a claim-by-claim basis, or you may sign a contract that defines an overall relationship with your professional, perhaps to be renewed annually. Your contract should include provisions detailing what services you’re using and what they cost so that both you and your professional know exactly where you stand before your relationship begins.

The collection industry is highly competitive, and you can expect competitive rates. You may agree to pay professionals by the service, by the hour, or on a contingency basis, where their fee is a percentage of the amount they recover. A contingency fee agreement should describe:

• When and how amounts recovered are to be remitted: For example, your agreement may require that payments by check be remitted when the debtor’s check clears the bank, or, for a certified check, immediately upon receipt. If the service is collecting multiple accounts, you may choose to schedule payments of remittances (e.g. biweekly or monthly) rather than separate payments for each remittance.
• Costs chargeable to you: If the debt collector charges costs in addition to the contingency fee, the contract should describe what costs may be charged and provide a proper accounting to you. For cases that go to court, expect to pay certain litigation costs like filing fees, deposition fees, and subpoena and witness fees.
• How remittances will be paid: Will your service pay you by electronic transfer, or by ordinary checks delivered by mail or overnight courier?

Before you hire a collections professional, figure out what services you actually need and what each service costs. You can make adjustments as you proceed, but you can avoid unnecessary sticker shock by paying attention to these details before you sign on the dotted line.

Need Debt Collection Help in Michigan?

Our firm has you covered!

If you’re frustrated with a lack of action from your debtor, our lawyers can help you with debt collection in Michigan. If you have questions about any part of the collection process, or if you’re ready to place a claim, call us at (248) 645-2440 or submit a contact form here.