Debt collection lawyer

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Helene Mueller
eCollect support team

A debt collection lawyer is hired by a debt recovery agency or by the original creditor in order to negotiate with subjects of debt and, if needed, to process the debt recovery to litigation actions and transfer it to court. Debt collection lawyers are legal representatives, who specialise in default payments’ issues and practice fair debt collection. Debt buyers employ private debt solicitors as well. After they purchase delinquent accounts from an original creditor, they will start the collection process. If the debt buyer fails to achieve debt recovery during pre-legal actions, a debt recovery lawyer will be hired to continue with legal proceedings and transfer the default profile issue to court, if required. Debt collection attorneys are a key point for successful and cost-effective debt collection. As collection solicitors are the last recovery instrument before court actions, it is essential that they succeed in collecting the debt amount without passing the case to court.


Authority and supervision of a debt collection lawyer

A debt collection solicitor has several important features, which present his authorised actions, regulated and granted by law:

A debt recovery solicitor can send juridical letters to the debtor. Such documents can consist of letter before action, letter of demand, etc. These letters have to be in compliance with different laws according to the country. Debt collection lawyers can personally visit the debtor in his premises and offer a convenient payment plan to settle the debt. In the UK, for example, such payment settlements are also called Individual Voluntary Arrangements (for consumer debtors) and Company Voluntary Arrangements (for commercial debts). A debt collection lawyer has the right to forcefully seize part of debtor’s property to clear the debt, but debt recovery solicitors rarely do so, as negotiation is usually a successful enough debt collection method. A debt collection attorney can resort to small claims court; advise a wage garnishment from a local court, or even submit bankruptcy proceedings. Enforcement of wage garnishment with the help of court and law orders are typical events when the debtor rejects the previous reminders, official letters and legal actions. The administrative wage garnishment represents court’s permission and authorisation of an agency (a debt recovery agency or the original creditor) to obtain a restraint for withholding a certain percentage from the subject of debt’s monthly wage. This amount varies in countries, but can also depend on the occupation of living and the amount earned per month. In the US, for example, this amount is not more than 15% of debtor’s monthly income; and the garnishment process is in compliance with Debt Collection Improvement Act of 1996. Various acts & laws supervise and regulate debt lawyers’ activities, e.g. in the US, this is the Financial Conduct Authority-
http://www.fca.org.uk/
. A debt recovery solicitor has to abide not only the laws valid for a debt collection agency but also specialised ones, which include acts to control the operation process of debt recovery attorneys. Some of the laws for both DCAs (Debt Collection Agencies) and debt attorneys are: the European Small Claims Procedure (for consumer debts), the European Order for Payment Procedure, the Bankruptcy Abuse Prevention and Consumer Protection Act for US, Collection Agencies Act for Canada, the Fair Debt Collection Practices Act (for US), the “Solicitors Order 1976” for Northern Ireland, etc.

Difference between debt collection lawyer and debt recovery agent

When a debt collection lawyer is part of a debt recovery company, the creditor can decide to hire a DCA along with the debt attorney. But if the collection solicitor is a private entity, sometimes it is not enough to proceed only with collection agency’s services. As a DCA and a collection attorney can be separate representatives, there are differences between the two of them as well:

  • Debt collection lawyers are usually needed for more difficult clients and are hired only when legal actions have to take place. If the pre-legal are successful, there is often no need to employ separate debt recovery attorney;
  • While DCA’s services can be free of charge for the creditor, a debt recovery lawyer always requests payment from the original lender, if it acts as a private representative separately from the debt recovery institution. A collection agency can offer free debt recovery process because it might collect its commission fee from the debtor instead. This is the reason why debt recovery lawyers are always preferred as a last resort. Some attorneys charge an hourly rate and some will not collect their interest unless they win the case in court;
  • A debt recovery solicitor has the right to send lawful letters, as a DCA is authorised to send only official ones, structured like a legal document, but not with the same law features;
  • When a debt issue case requires being forwarded to court, a debt recovery lawyer transfers the debt case, not the DCA;
  • Legal claims are also sent by the solicitor, not by the collection agency;

Debt collection solicitors are empowered by law to forcefully seize debtor’s belongings and settle the debt amount in full. A debt collection agency can also perform in-house visits but has no right whatsoever to sell debtor’s personal belongings without the written agreement from the subject of debt.


Used literature & external links

http://www.nibusinessinfo.co.uk/content/using-solicitors-and-debt-recovery-agents
 

http://www.findlaw.co.uk/law/bankruptcy/debt_collection/500111.htm
 

http://consumer-law.lawyers.com/debt-collection/types-of-debt-and-debt-collection-practices.html
 

http://www.stepchange.org/Debtinformationandadvice/Whatyourcreditorscando/Solicitorsletters.aspx
 

http://fms.treas.gov/debt/awg.html