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    Debt Recovery: Lawyers vs Debt Collectors

    Jul 31, 2019 11:04:26 AM

    Unlike wine, debts don’t improve with age. Once you have made a decision to take action to recover a debt, it is important to move quickly in deciding the means by which you will pursue repayment.

    While you can initially attempt to recover the debt personally by way of letters, emails and calls, our experience tells us that the longer you waste time repeating this process, the less likely you will recoup your debt. If your debtor isn’t paying you, it’s probable that they aren’t paying others either, so it is important you move quickly and engage a professional to handle the debt recovery for you. You don’t want to end up with a stale debt that ends up being written off as a loss.

    When engaging a professional, the choice is usually between a lawyer or a debt collector. Some guiding factors to assist you in making this decision include the following:

    1. How would the debtor react if they received correspondence from a lawyer or a debt collector?
    2. How quickly do you want the debt repaid?
    3. How much will your chosen professional charge to recover the debt?
    4. Are you willing to negotiate on the debt?
    5. Are you willing to take enforcement action if the debtor continues to default on repayment?

    In relation to the above considerations, we advise the following:

    1. A letter of demand sent by a lawyer will often prompt debtors to repay the debt or at the very least commence negotiations regarding the amount to be repaid. The threat of court proceedings is a tool that lawyers can use to get debtors moving.
    2. Depending on the debt, debt collectors can sometimes have an incentive to recover the debt faster as their commission is on the line. However, as above, a simple letter of demand from a law firm may prompt immediate action from the debtor. Depending on your circumstances, speed may not actually be an issue, especially if interest is accruing on the debt according to the terms of any contract or court orders.
    3. While you may not have to pay a debt collector up front, often they will take home a significant portion of your debt by way of commission at a fixed rate. Therefore, the larger debt, the more cost-effective it is to engage a lawyer.
    4. Lawyers are skilled, professional negotiators. If you are willing to negotiate on the debt to ensure repayment, then lawyers are best placed to negotiate a settlement.
    5. The greatest limitation of debt collectors is that they cannot enforce the debt without engaging the legal process. As above, lawyers have recourse to the court system and can take legal action to enforce a debt if a debtor refuses to repay. Through the courts, lawyers can obtain judgment that secures the debt and on which interest will accrue if the debtor continues to avoid repayment. Ultimately, you can ensure your debt is repaid by going through the process of bankrupting a debtor individual. Alternatively, a statutory demand can be served on a debtor company that may result in winding up proceedings if the company continues to default.

    There are clear benefits of engaging a lawyer to handle your debt recovery, especially with larger debts. We can negotiate, litigate and enforce your debt to ensure you are repaid what is owed to you. We also have flexible payment arrangements to assist with this process.

    If you have further question about the debt recovery process, please contact Matthew Sibley at

    This is not legal advice. 

    Matthew Sibley

    Written by Matthew Sibley