Debt collection agency - advantages and disadvantages of a debt collection agency

Let's start by putting our money where our mouth is: we are a debt collection company - and have been since 1998. 

Why does a debt collection agency highlight the pros and cons of a debt collection agency - and is our assessment completely objective?

The answer is yes - we obviously don't produce anything we don't stand behind, and we know the pros and cons of a debt collection company - rather than a debt collection lawyer, for example

Below, we give our best take on the pros and cons of a debt collection agency - and how we give you the advantages of both the classic debt collection agency and the classic debt collection lawyer.

What is debt collection?

Debt collection is a process where you, a debt collection company or a lawyer takes a series of actions to secure payment for one or more unpaid invoices.

Debt collection includes a wide range of actions, such as calling, physically visiting the debtor, sending reminder letters, sending a debt collection notice, registering the debtor in RKI and the Debtor List, imposing a reminder fee or presenting the debtor in the enforcement court - i.e. judicial debt collection. 

Debt collection is far from a specific script, and debtors are far from being treated in the same way - it depends both on the debt collection company you use and the actions deemed necessary to recover the money.

What can a debt collection agency do?

A debt collection company can run a professional collection of your unpaid invoices - whether you have a few or many collection cases.

The debt collection company uses its experience in handling typically thousands of cases to recover your claims, using the legal means available: calls, physical appearances, imposition of fees, bailiffs, etc.

Basically, there is nothing a debt collection agency or a debt collection lawyer can and must do that you cannot do yourself.

What are the advantages of a debt collection agency?

There are many advantages to using a professional debt collection company rather than handling the debt collection process yourself. Most Danish debt collection companies often have no other primary activity - other than debt collection - and thus their primary purpose is to get their customers' money back.

The benefits of using a debt collection agency are often

1. The process is often more systematic - and often shorter than if you were handling the debt collection process yourself.
2. The legally correct fees are correctly applied.
3. The correct legal deadlines are respected.
4. Often a lot of experience secures the money faster.
5. The debtor often has a greater respect for a debt collection agency or a lawyer
6. Often cheaper than if you had to do it yourself.

What are the advantages of a debt collection agency - rather than a lawyer (debt collection lawyer)?

If you don't want to handle your debt collection yourself, but want to let a professional partner handle it for your company, in Denmark you basically have two alternatives: a debt collection company or a lawyer (inkassoadvokat).

The overriding advantage of a debt collection agency over a lawyer is that the debt collection agency's only activity is often debt collection - and thus getting your money back. Because often lawyers dealing with debt collection (and thus referred to as debt collection lawyers) is not their only activity in the law firm - and is often a task among all others in a law office, on par with helping with divorce papers, helping with house deals, etc.

You should also be aware that in practice it can often be a student assistant, a legal secretary or similar who assists the lawyer with the debt collection process itself - and rarely a trained lawyer who handles the case for you.

At the debt collection agency, your case is often always handled by specialized staff who do nothing else but debt collection on a daily basis.

There is basically no difference in what legal acts a lawyer is allowed to do compared to a debt collection company when it comes to debt collection. All lawyers are legally allowed to engage in debt collection - and those who do so often refer to themselves as debt collection lawyers. 

You should be aware that not all lawyers want to help you with debt collection - if the lawyer has chosen to specialize in other areas of expertise.

The typical picture is also that a debt collection agency is cheaper than a lawyer - who will often charge a fixed price or lawyer hourly rate for the assistance - regardless of the outcome of the debt collection case. While debt collection agencies typically have more flexible pricing models, such as subscriptions, fixed price agreements or a no cure, no pay payment, where you are only charged when and if you receive your payment.

What are the disadvantages of a debt collection agency - compared to a lawyer (debt collection lawyer)?

Just as there are clear advantages to using a debt collection company rather than a lawyer, there are of course also certain disadvantages that you as a debtor should be aware of when choosing a debt collection partner.

Because while a debt collection company typically handles a few hundred thousand cases annually, and often has a very high level of knowledge in handling debt collection - a typical lawyer often handles much smaller portfolios of debt collection cases. 

If you want a very personalized dialogue with your debt collection provider, typically on very complex cases, such as rent or construction cases - where the unpaid invoice is only a small part of the problem - it can have its clear advantages to use a lawyer - rather than a debt collection company. Because here the lawyer's many legal skills can come into play, where the law of debt collection often ends.

Just like with the lawyer, you should be aware that not all debt collection companies in Denmark can and will help you. Some debt collection companies have chosen to focus on clients with very large portfolios of debt collection cases (typically 50+ debt collection cases), annually - and if you have less than that number, then the debt collection company will typically not help you.

Choose Collectia - and get a debt collection company that offers the best of both worlds 

In Denmark, you have two options for debt collection if you don't want to do it yourself: a debt collection agency or a lawyer.

The debt collection company typically has a large number of cases, and thus a very high level of knowledge about effective recovery and thus low prices - while the lawyer often specializes in typically more complex cases, and therefore typically with a higher price for recovery.

At Collectia, we have combined the best of both worlds - and can offer all companies debt collection at a high professional level - with low prices and lawyers who are ready if needed.

Since 1998, Collectia has helped small and medium-sized Danish companies with debt collection, no matter how many cases they have. The vast majority of cases are often resolved without the help of a lawyer - but if we need legal assistance in the process, Collectia has a strong collaboration with a law firm that is ready to help.

This gives you all the benefits of Collectia.