One of the major benefits to working with a collection agency is that you only pay a fee if they successfully collect on the file you give them. This means if they can’t collect your money, you don’t pay a dime. Debt collection agents operate on a commission, usually collecting about one third of the commission.
However, this isn’t always the case. If you have several small debts of just a few hundred dollars each, the collection agency might require a fixed fee to handle those accounts to make it worth their while. But most of the time, it will be based on commission.
A Collection agency can earn its fee by taking a small portion of the money they successfully collect on. The percentage can range from 10% to 50% with the average being between 25% and 40%.
The variance of the fee is typically based on how old the debt is. Older debts can be more difficult to collect and the agent will require a higher fee to go after those accounts. Also, make sure you factor in how difficult it will be to collect certain debts. As a general rule of thumb, the riskier the debt, the higher the fee.
You could be responsible for some other charges related to their collection efforts including fee-based background checks, court costs, filing fees, and long-distance phone calls.
Before a collection agency will work a single claim, they will write up an account release form that details the terms of your working arrangement including their responsibilities, the fees, any additional expenses, and customer service policies.
Be sure to read the contract over carefully for any fine print or contract language that seems confusing. If you notice discrepancies in the contract, make sure the agency fixes the problems immediately before requiring you to sign anything.
Rapid Recovery Solution is a commercial collection agency .