Different Debt Collection Methods - Pros and Cons

In Self Help Debt Collection the Business tries to collect the debt directly.   

Pros

• it doesn't cost anything 

(except your time!)

• you can make a Court claim yourself (but do you know how and what to do?) 

Cons 

• you get all the excuses - the cheque is in the mail! I didn't get the invoice! You didn't do a good job so I am not paying! etc 
• it takes time
• determined debtors drag it out in the hope you will forgo the debt
• If you start a Court claim yourself and are not experienced, there are many traps and difficulties 

A mercantile agent is a professional debt collector that is not a lawyer. 

Pros

a skilled debt collector will get the debtor to offer payment of some or all of the debt, or a payment plan

Cons 

• they usually charge a percentage of the debt to be collected, amounts between 20% and 40% are not unusual!  This means there is no chance you will get paid in full
• the method of collection is usually phone calls, emails and letters. Experienced debtors know to ignore them!
• it takes time - and given time is money, why waste it if it's not working? 
• there is no independent decision or enforcement 

Lawyers use the Court system to collect debts for Businesses. 

Pros

• Lawyers can collect debts in the same way a Business or a Mercantile Agent can, but they usually don't waste time with excuses from debtors trying to avoid payment
• Lawyers use the Court system which allows you to charge interest and certain costs to the debtor, even if your Ts and Cs don't 
• There is a chance you can get paid in full (plus interest and certain costs) 
• An independent person (a Judge!) makes a decision which is enforceable agianst the debtor's property 

Cons

• Lawyers can appear to be expensive 
• it takes time if the debtor lodges a defence