Topic: collection attorney

collection attorney in texas

A collection agency can be defined as a third party organization that teams with another company to help collect on past due receivables. In most cases, there are three types of collection agencies. Those that collect strictly from individuals and are labeled as a “Retail Agency”. Those that collect from businesses and are labeled as a “Commercial Agency”. Then those that collect from both. This article will explain the difference between these types of agencies and the benefits of utilizing an agency to help with troubled accounts. Collection attorney

Retail collection agencies are the most populace type of agency in the industry. American consumers are estimated to have 11.13 trillion dollars in debt. 849 billion from credit cards, 7.81 trillion in mortgages and 996 billion in student loans. With the average household consumer debt profile totaling close to two hundred thousand dollars, it’s easy to see why retail agencies have such a presents in our country today. Collection attorney in texas

There are typically two types of creditors that utilize retail collection agencies. Secured Creditor, and Unsecured creditors.

A secured creditor can be defined as a lender who holds legally enforceable claim on a borrowers asset(s) of a liquidation value equal to or greater than the loan amount. Secured creditors are entitled to receive the proceeds of the foreclosure sale of the pledged asset(s) and, in case of a bankruptcy, must be satisfied before the unsecured creditor(s). For example mortgage lender, auto lender, commercial loan from a bank that requires a form of collateral, etc.. These transactions are recorded on the borrower’s credit. Third party collection agencies are often utilized when these types of debt go to charge off status. In most cases secured creditors have a stringent in house collection effort and will only turn an account to collection agencies once they have exhausted all efforts internally. Retail agencies usually have the ability to report the borrow credit as being placed for a collection effort. This will affect the borrower’s credit negatively in two way, one when the account is charged off by the secured creditor and two when the account is reported as a collection account.

An unsecured creditor can be defined as a creditor who extends credit to a debtor without a collateral security. If the debtor files for bankruptcy or is levied upon, the unsecured creditors are paid on a pro-rata basis only after the claims of all secured creditors are satisfied. For example, service provider (pest control, plumbers, lawn professionals, etc). Third party collection agencies are often utilized sooner in these scenarios considering the risk that unsecured creditors have when giving credit terms. Collection attorney

A majority of creditors who utilize Commercial Collection Agencies and Unsecured creditors who offer net credit terms to businesses for products or supplies. Most secured creditors who supply to businesses have the necessary collateral in place. If the company defaults they are capable of recovering the collateral. When a business falls behind with an unsecured creditor it is unlikely the creditor is able to recover the product, and impossible to take back the service. Due to these circumstances, having a third party commercial agency to turn to is extremely valuable and often time absolutely necessary.

In the course of business every company will deal with delinquent receivable accounts. These accounts can be handled by internal collectors, a collection..