When Should Your Business Hire a Collections Attorney Instead of Using a Collection Agency?

Unpaid invoices or bills can disrupt cash flow, strain business and client relationships, and consume valuable staff time. Collection agencies and collections attorneys can both help businesses pursue overdue accounts, but they serve different purposes. While collection agencies generally try to secure voluntary payment via letters, phone calls, and settlement discussions, collections attorneys can do the same while evaluating legal claims and pursuing court-authorized remedies.

Learn more about where each option may be the right choice for you. If you believe a collections attorney could help you collect what you’re owed, we’re here to help. Reach out to Crawford & von Keller online to discuss your options in greater detail.

Collection Agencies May Work for Routine, Undisputed Accounts

If the debt in question is relatively small, clearly documented, and not seriously disputed, a collection agency may be the appropriate choice. For example, if you have unpaid invoices that are supported by signed agreements and an established payment history, a collection agency may be able to secure payment.

You may also opt for a collection agency if the debtor is responsive but needs persistent reminders or help setting up a payment plan. Note that collection agencies are often regulated at the state level, so you should ensure that any agency you choose has the necessary authorizations.

Consider an Attorney When the Debtor Disputes the Debt

Legal representation is often recommended if the debtor claims that the amount is incorrect or that your company did not fulfill its obligations, leading them to believe that payment is not required. Disputes often involve incomplete delivery, defective work, unauthorized charges, payment credits, or contract interpretation.

Your collections attorney can review the underlying documents to assess whether the debtor has a valid claim or counterclaim. This allows you to decide whether to negotiate, send a formal demand, or prepare for litigation.

Hire an Attorney if a Lawsuit is Necessary

If legal action becomes necessary, a collection agency typically cannot represent your company in court. There are limited exceptions in some states, but generally, you need an attorney to represent you.

Warning signs that litigation may be necessary include ignored demands, asset transfers, multiple broken payment promises, or a rapidly approaching statute of limitations. Because procedures and timelines vary between South Carolina, North Carolina, and Tennessee, state-specific guidance is important.

Larger or More Complicated Debts May Warrant Legal Involvement

High-value accounts often warrant consulting with a collections attorney, even if the debt is well-documented and backed up by contracts and previous payments. Complicated debts, including those involving individual guarantors, multiple companies, secured property, or parties located across multiple states, may also benefit from the help of a collections lawyer.

Your lawyer can evaluate jurisdiction, available collateral, and the likelihood that the debtor has collectible assets. Bringing in an attorney early may help you avoid spending too much money to pursue a debt that the debtor cannot reasonably pay.

An Attorney Can Help Collect After Judgment

A collections attorney may be necessary if you have a judgment against a debtor but have not been able to secure voluntary payment. In this situation, your attorney can pursue post-judgment discovery, garnishment, liens, asset seizure, and other remedies.

Explore Your Options With Crawford & von Keller

If you need help collecting a debt in South Carolina, North Carolina, or Tennessee, the team at Crawford & von Keller is here to help you choose the right path forward. Call our South Carolina office at 803-790-2626, our North Carolina office at 910-363-1637, or our Tennessee office at 615-807-0939. You can also get in touch with us online.