Navigating the court system on civil matters can be a difficult and time-consuming process for creditors. From filing paperwork to making appearances in court and dealing with potential appeals, there are many potential pitfalls that make litigating a debt more complicated than it may appear.
That’s why it often makes sense to consider staying out of court altogether and choosing affordable debt collection agencies instead. They have the experience and resources necessary to attempt to collect debts without involving courts, which can save money and hassle while potentially getting quicker results.
In this blog, we’ll be looking at how you can tell when litigation is necessary, why you should steer clear, and how you can avoid it. Let’s get started!
Understanding the Debate
Understanding when to litigate and when to hire a collection agency is essential for businesses looking to manage their debts in an effective manner. Litigation can be expensive and time-consuming, whereas hiring a collection agency may require less effort and resources. For this reason, it is important for companies to weigh the advantages and disadvantages of both options before making a decision. Doing so will help them make an informed choice that best suits their company’s needs, as well as ensure they select the most cost-effective method of debt collection.
The Benefits and Challenges of Litigation
Litigation is the process of taking legal action in order to recover an unpaid debt. It involves a lawsuit being filed against the debtor, typically with the assistance and guidance of a lawyer. Litigation can be an effective way for creditors to recoup their losses and may also deter the debtor from engaging in similar behavior in the future. However, this form of debt collection is expensive and requires significant resources, both financial and otherwise, so it should only be pursued as a last resort. Additionally, litigation often takes time to resolve and there is no guarantee that creditors will receive any compensation even if they win the case.
How Affordable Debt Collection Agencies Offer a Better Alternative
Hiring an affordable debt collection agency instead of litigating can bring a number of advantages to creditors. The most obvious benefit is that it requires less effort and resources than the traditional route of litigation.
Debt collection agencies specialize in dealing with debts, so they often have the experience, knowledge, and resources necessary to effectively recover the debt without a lengthy, costly court case.
Additionally, working with a debt collection agency gives more flexibility for negotiating payment plans or settlements with debtors. This can be beneficial for both parties as it allows them to come up with an acceptable solution that allows the creditor to recoup some of their losses and enables the debtor to resolve the issue without accumulating legal fees.
Finally, hiring a debt collection agency also offers a quicker resolution than litigation as it does not require going through all the stages of filing a lawsuit and awaiting final judgment. This quicker turnaround time means creditors can start recovering their losses sooner rather than later.
Finding a Path Forward
Knowing when to turn the debt over to a collection agency rather than litigate can be an important decision for creditors. First and foremost, it is important to consider the amount of money owed and the likelihood of repayment.
If the total owed is relatively small, then litigation may not be worth it. Additionally, if there is little hope of the debtor paying the debt back in full, such as in cases involving companies that are no longer in operation, then turning to a collection agency is likely a better option.
Another factor to consider is how quickly the creditor needs to collect reimbursement for their losses. If speed is essential, then hiring a collection agency might be more appropriate since this process usually results in faster resolutions than going through court proceedings.
It is also important to keep in mind that collection agencies often work on a contingency basis which means that they do not require up-front payments from creditors and only get paid upon successfully settling the debt or obtaining repayment from the debtor.
Ultimately, each creditor should take into account all these factors before making any decisions about whether or not it’s better to turn the debt over to a collection agency rather than litigate.
Choose the Best Option for Your Situation
While there are some specific strategies that can help them make an informed decision, it ultimately comes down to factors such as cost and timeline that need to be taken into consideration when deciding on what approach will best benefit you in terms of recovering any losses.
Give special consideration to the points we’ve raised above. And if you need help recovering a debt, remember that Southwest Recovery Services is one of the most affordable debt collection agencies of all, and we’re able to do it while still getting the best results for our clients. Contact us today to learn more.