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What does it cost to use a Collection Agency?
Home » Accounting » Collection Agencies » What does it cost to use a Collection Agency?The cost of using a collection agency varies from agency to agency and depends largely upon the specific needs of a particular lender. Some collection agencies work purely on a flat-rate basis, while others offer both flat-rate and contingency based services. Understandably, most lenders would prefer that the collection agency work on a contingency basis, so that the lender suffers no expense unless the collection agency recovers some portion of the debt. Collection agencies that work on a contingency basis generally charge between 33-50% of the debt collected as a fee. However, some collection agencies only offer a contingency fee plan if the debt is over a certain minimum amount.
Many collection agencies also offer a fee plan that changes according to the needs of the lender. If, for example, the lender requests merely that the collection agency mail two or three letters, the collection agency might charge a flat fee of $15.00 for the service. If the debtor chooses to ignore the letters and the lender requests additional letters and phone calls, the collection agency might then use a contingency fee plan for the remainder of its collection attempts.
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