Although debt collection tends to get a bad rap, there are several economic benefits to using a debt collection attorney. If you’re a creditor, using a collection attorney can help improve the efficiency, effectiveness, and legality of the debt recovery process.
Unpaid debts can accumulate interest or fees, but if they’re not recovered quickly, they often become uncollectible. Lawyers can help secure debt before it becomes too old to be legally recoverable. This helps to minimize bad debt write-offs, improving financial statements and cash flow. Improving cash flow is especially crucial for securing loans. Often, lenders will monitor accounts for cash flow and limit funds if debts are not being repaid. A stronger balance sheet can improve relationships and lead to better terms with banks and other investors.
Risk follows profit. In some cases, creditors are responsible for the risks and costs involved in trying to collect debt (legal fees, filing fees, etc.), and get paid if debt is recovered. In other cases, the attorney assumes risk when working on a contingency basis. In this case, the attorney is accepting the risk of unpaid time and effort in exchange for a percentage of the recovered debt. This format means that the attorney is sharing the risk. Like any other investment, if the expected profit from collection justifies the risk of legal costs, it benefits the creditor to utilize an attorney.
Ways Debt Collection Attorneys Can Be Beneficial
Attorneys are more effective at collecting delinquent accounts than regular debt collection agencies, as they carry more prestige and authority. Debtors are more likely to take notice if threatened with a suit. The timely recovery of funds enables businesses to reduce write-offs and reinvest capital in operations and growth. Debt collection attorneys aid the job market as well. Unpaid debts can impact a company’s financial health, which can lead to layoffs and closures. By recovering unpaid accounts, collection attorneys help to sustain jobs, contributing to the local and national economies.
Debt collection attorneys not only benefit creditors, but also the economy. Unpaid debt on a large scale can destabilize banks, credit markets, and entire national economies. By resolving or liquidating non-performing loans, debt collection lawyers reduce the burden on financial institutions. Debt collection attorneys ensure. that contracts and loan agreements are enforceable in court, within the bounds of the law. When investors and banks know that there is an effective legal pathway to recover debts, they are more willing to lend or invest.
Debt collection attorneys provide creditors with a legal, efficient, and often more successful means of recovering unpaid debts. This helps to improve cash flow, strengthen financial positions, and minimize losses. Their involvement ensures that financial obligations are enforced in accordance with the law, reinforcing trust in lending systems and supporting the overall stability of the credit market.
Looking for an attorney to handle your debt collection case? Contact Frank, Frank, Goldstein and Nager by email or call +1 (212) 686-0100. We have the experience that pays. Subscribe to our YouTube channel for more debt collection news and best practices.
