Debt Collector or Lawyer: Which is Best?

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Introduction

Should you hire a debt collector or lawyer?

This is a great question.

We’ve written a case study so that it’s easy to understand.

Want to learn how you can keep more of your money if you hire a lawyer?

Let’s get started.

Case Study

John runs a small business and sends an invoice to one of his clients for $10,000.00. Unfortunately, John’s client fails to pay for John’s services.

What should John do?

John is unsure if he should hire a:

  1. Debt collection agency
  2. Law firm specialising in debt recovery

Here’s how each decision could affect the final outcome.

Scenario A – Debt Collection Agency

John engages the help of a debt collection agency. The debt collection agency tells John that they will take a 15% commission of the debt as payment. This is an industry-standard for debt collection agencies. What does it mean? In simple terms, if the debt collection agency is successful, $1,500.00 of John’s money will go toward the debt collection agency, leaving him with $8,500.00. 

Scenario B – Law Firm

John engages the help of Australia Debt Recovery. We are a law firm that specialises in debt recovery.

We provide John with a fixed costs agreement that reflects Schedule 1 of the Legal Profession Uniform Law Application Regulation 2015 (NSW). This agreement details the maximum legal costs that may be recovered from a Defendant. In most cases, we’re successful in recovering all legal costs from the defendant. And the client is not required to pay upfront costs. 

John decides to proceed with our services.

A Statement of Claim is filed with the NSW Local Court. 

28 days later, the Court awards Default Judgment in John’s favour. 

John asks us how he can get his money and we advise on the available options.

As a result, John decides to proceed with a Garnishee Order naming the debtor’s bank account. 

A garnishee order is a court order that allows you to recover the judgment debt from: ​​

  1. the other party’s bank account 
  2. the other party’s wages 
  3. someone else who owes money to the other party.

In other words, it’s a court order that tells the garnishee to pay the money they hold on behalf of the other party to you. The garnishee is the person or institution that holds the money.

John receives $10,000.00 in addition to legal costs and interest. After the legal costs are paid, John is left with $10,000.00 in addition to the interest owed to him.

The amount of interest varies depending on the circumstances of each case.

What should John do?

If John proceeds with scenario B, he’ll keep $1500.00 more of his hard-earned money, compared to hiring a standard debt collection agency.

Takeaway: Debt Collector or Lawyer?

A debt collector will often cost MORE than a lawyer.

Want to learn more?

Please contact us today for an obligation-free debt assessment.

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