HomeBusinessDebt Collection Agency or Debt Collection Attorney, Which Is Better?

Debt Collection Agency or Debt Collection Attorney, Which Is Better?

Debt collection agency or debt collection attorney, which is better?

Are you trying to figure out who to hire to help you recover money owed to you?

Perhaps you want to educate yourself on the differences between a debt collection agency and debt collection attorney.

In this article, we will look at answering your questions. What is a debt collection agency and a debt collection attorney, how can they collect debt for you, when should you considering hiring a debt collection agency vs a debt collection attorney, how much do they cost and more.

We have divided this article into the following sections so you can navigate directly to the section of your choice:

Let’s get started…

What Is A Debt Collection Agency?

A debt collection agency is a company specializing in handling and collecting certain types of debt.

Typically, debt collection agencies work for businesses that can bring them important volumes of debt to collect such as consumer debt, credit card debt, unpaid phone debt, commercial debt and so on.

Debt collection agencies are bound by specific laws and regulations governing the manner they are authorized to collect an outstanding debt, namely the Act respecting the collection of certain debts

To be legally authorized to conduct a debt collection business, the agency must have a valid permit allowing it to collect debt in the Province of Quebec.

How Can A Debt Collection Agency Collect Debt?

Debt collection agencies employ certain techniques to recover debt.

The law regulates the manner the debt collection agencies may conduct themselves in engaging with people to collect an outstanding debt. 

For instance, debt collection agencies must first contact the debtor in writing. 

Then, they can reach out to the person by phone between Mondays and Saturdays from 8 a.m. to 8 p.m.

They must clearly outline what is the debt they are pursuing and how much is outstanding.

Debt collection agencies are not allowed to use pressure tactics or threaten debtors to make a payment.

They cannot lie or mislead the debtor about possible consequences of non-payment, they cannot claim that you may get arrested, harass or intimidate you.

The collection agency will exercise all possible legal pressures to collect the debt in such a way that the case never goes to court.

If the collection agency is successful in collecting the debt, then they will earn their fee and pay you the difference.

However, if they are not successful to collect, they will not be able to take the case to court as they are not lawyers.

Their job will therefore end there.

If they are unable to collect, they must either refer the case back to the creditor or give it to a collection lawyer for the continuation of the collection efforts.

How Much Does A Debt Collection Agency Cost?

Debt collection agency costs can vary depending on the value of the debt, nature of the debt, how much they must collect and the scope of their work.

You can expect to pay anywhere between 25% to 50% of the value of the debt you are trying to collect to a collection agency.

Typically, they will put the effort in collecting the debt and from the amount they recover, they will keep their share and pay you the difference.

The advantage of dealing with a debt collection agency is that they will not charge anything upfront. 

They will collect their fees based on what they are able to recover.

The disadvantage is that they will be expensive unless you work in great volumes with them.

They can potentially take up to half of the value of your claim.

When Should You Work With a Debt Collection Agency?

If you have a type of business where you have money owed to you by many people in small amounts, then it may worth it to collect your debt with the support of a debt collection agency.

The debt collection agency will typically have a business model where they work based on a high volume of debt collection activities.

Their business model is based upon automated workflows and processes to call and contact debtors owing money in volume with little human intervention. 

That’s how they can keep costs low and be profitable in collecting delinquent accounts. 

The type of debt collection agencies prefer to collect is credit card debt, unpaid phone bills, consumer debt and so on where it is undisputed that the debtor owes money to the merchant, bank or creditor.

If the debt is disputed or easily disputable, complex or not suitable for automated workflows to process, then debt collection agencies may not be your best bet.

In such cases debt collection lawyers will have the upper hand.

Debt collection attorneys are able to deal with fewer cases, higher in value and with complexities that can only be sorted out legally.

What Is A Debt Collection Attorney?

A debt collection attorney is an attorney specialized in collecting outstanding accounts and debt.

The debt collection attorney must have experience in both the debt recovery laws and litigation to be able to successfully collect what is owed to you.

Debt collection attorneys in Quebec are regulated by the Professional Code of Quebec along with the Code of Professional Conduct of Lawyers.

Pursuant to these rules and regulations, the debt collection lawyer is subject to high standards of professional integrity and conduct in the performance of his or her debt collection activities.

Similar to a debt collection agency, debt collection lawyers cannot intimidate, harass or breach any file confidentiality in the course of their professional activities.

How Can A Debt Collection Attorney Collect Debt?

A debt collection attorney will exercise legal efforts to collect a debt owed by a debtor.

One of the first things a debt collection attorney will do is to investigate the debtor and validate if the debtor has sufficient assets to allow for the recovery of the outstanding debt should a forced execution be required.

The lawyer will also evaluate how much debt can be recovered in the Province of Quebec and how much can be recovered outside of the Province.

If debt may need to be collected outside of the Province of Quebec, the debt collection attorney will evaluate the enforcement of a foreign judgment in the applicable jurisdictions. 

Once all the validations are done, the lawyer will send a formal notice of claim to the debtor demanding payment within a short period of time.

If the debtor does not pay, then the lawyer will file a debt collection lawsuit before the competent court.

At the end of the legal proceeding, the court will award a judgment legally condemning the debtor to pay.

If the debtor does not pay voluntarily further to a court judgment, the debt collection attorney can then move to execute and seize the debtor’s assets in order to recover the value of the judgment.

When To Hire A Debt Collection Attorney To Collect Debt?

In some cases, you are better off hiring a debt collection attorney to collect what’s owed to you.

If the value of the claim is high, the money you claim is disputed or disputable or there are complexities or ambiguities that only a legal process can sort out, then you should work with a debt collection attorney.

In such a case, a lawsuit may be required and proper evidence administered by both parties in an adversarial litigation case.

The more the case is complex or ambiguous, the more the other party will most likely file a defense against your claim arguing that your demand for payment is unfounded.

For example, if you are a business offering consulting services and you have worked for $50,000, you’ve sent an invoice to your client but they are failing to pay you.

They claim that you did not render quality services and thus they are not justified in paying.

In this kind of case, considering that your claim is disputed and the debtor has some arguments to contest your invoice, whether the arguments are valid or not is irrelevant at this point, then you are better to hire a debt collection attorney.

How Much Does A Collection Attorney Cost?

Working with debt collection attorneys can vary in costs.

If you are working with an international law firm as opposed to a boutique law firm, you will surely see a great difference in the legal charges to file a debt collection lawsuit.

A debt collection law firm will evaluate the risk factors of your case, the amount of debt to be recovered along with the potential chances of success to evaluate the proper fee arrangement.

The higher the chance of success, the more the debt collection attorney can be tempted to work with you on a contingency basis or a combination of hourly rate and contingency.

Debt collection attorneys can take some risks in taking your file.

You should expect that the debt recovery lawyers will not take more risk than you in your case.

In the best-case scenario and if the facts of the case permit, you can expect the lawyers to offload 40% of the risk. 

The fee arrangement will result in you carrying 60% of the risk and the lawyers 40%.

A good debt recovery case can look like the following:

The attorney will scale back 10% to 40% of their hourly rate combined with a success fee of 10% to 40% of amounts recovered.

If you abandon your case prior to the final recovery, the lawyers will issue a charge-back of the discounts given to you on the hourly rate.

Which Is Better: Collection Agency or Debt Collection Attorney

Both service providers have merit.

The short answer to this question is that it depends!

The best way to answer the question of which service provider is better is to use an example. 

If you are a merchant having 500 customer accounts owing you money between say $100 to $1,000, having a total value of $50,000, then you should work with a debt collection agency.

It does not make sense to institute 500 lawsuits so you can claim a few hundred dollars per person!

A debt collection agency can take your 500 delinquent accounts and write 500 letters, make 500 phone calls, countless follow-ups and work in volume.

They can do that as they leverage software tools and systems allowing them to automate a good amount of administrative tasks so they can handle the volume without incurring too much overhead costs. 

On the other hand, if you are owed an important sum of money, say anything over $20,000, where your client has disputed the quality of your services or the basis of how your calculated the sums payable, then it may be worth it to retain the services of a debt collection attorney.

Considering the value of the claim is high and the debtor has grounds to dispute what is owed to you, then working with a debt collection attorney may be the most efficient way for you to recover your money through legal channels. 

Every case must be evaluated individually to see if you should go the collection agency route or debt collection attorney route.

In the end, both service providers can provide valuable services to you.


In this article we looked at the services offered by debt collection agencies and debt collection lawyers.

We evaluated how they work and in what cases you may see value hiring the services of either one.

Both debt collection agencies and debt collection attorneys may bring value to your business.

You will need to assess the nature of the debt, the number of people or clients owing you money, how disputable is the debt you are owed and so on to decide which service provider can be best for you.

Should you wish to evaluate and assess your debt recovery case, you can reach our debt collection attorney for an assessment of your case. 

Very quickly, we can identify if we can provide you valuable legal services or not. 

If you may find greater value working with a debt collection agency, we will advise you accordingly.

Contact us for any debt collection services or if you need to speak to a debt collection attorney.

We wish you all the best in your debt recovery journey!


Latest Posts

Editor's Picks