The ups and downs of the debt collection industry in 2022: the choice between a debt collection agency or a debt collection lawyer

Thousands of Danish companies use debt collection services. Some companies handle debtcollection in-house, either directly or through an external collection agency, where the collection is handled by an authorized debt collection firm. Others engage a lawyer who specializes in debt collection—often referred to as a debt collection attorney.

But what should you actually choose in 2022: a debt collection attorney or a debt collection agency?

In this article, we’ll focus on the differences between debt collection agencies and debt collection attorneys. We promise to be as objective as possible, even though we are a debt collection agency ourselves.

The Debt Collection Attorney

A debt collection attorney is an attorney who specializes in debt collection. In principle, all attorneys are permitted to handle debt collection, and it does not actually require a special debt collection license. An attorney simply needs to hold a license to practice law. If they have this license, they may handle debt collection on behalf of others—whether individuals or businesses.

That’s why you should first and foremost find out whether your lawyer is actually allowed (and willing) to handle debt collection. Because by no means do all lawyers want to. According to Advokatnøglen, only 65 law firms in Denmark have chosen to indicate that they handle debt collection.

That said, lawyers are often skilled at handling complex, legally dense, and perhaps convoluted cases—cases that may not even begin as debt collection cases. Perhaps the case began as a civil lawsuit, a criminal case, or something else entirely.

If your company already works with a skilled attorney who is willing and able to assist you with debt collection, it may also be advantageous to choose an attorney who is already familiar with your company.

If your attorney does not specialize in debt collection—and therefore does not have effective systems and processes for handling it—you should be aware that managing the debt collection process is often a secretarial task; thus, it is not your attorney who is handling the matter. This doesn’t necessarily have to be a disadvantage, but you should simply be aware that debt collection is often “just another service” offered by the law firm.

The fees charged by a law firm are (often) significantly higher than those charged by a debt collection agency, since lawyers in many cases charge an hourly rate for their cases.

In our experience, there are more lawyers than debt collection agencies that handle debt collection for private individuals. In fact, we don’t know of any debt collection agencies that serve private individuals.

The Collection Agency

A debt collection agency is a company authorized by the National Police to handle debt collection on behalf of others. As of mid-2022, there are just over 120 debt collection agencies in Denmark that are legally permitted to assist your business with debt collection. However, just as with a debt collection attorney, not all of them will necessarily be willing to help you and your business deal with your delinquent payers.

Many debt collection agencies often require their clients to submit a certain number of debt collection cases over the course of a year. If you don’t have enough cases, you may be forced to find another debt collection agency or perhaps a debt collection attorney to handle your cases. However, if you find a debt collection agency willing to help you, you’ll often find—unlike with most attorneys—that they offer a “no cure, no pay” arrangement. As a result, you’ll (often) find the process to be less expensive, since debt collection agencies make their money from the interest and fees charged to the debtor. You’ll receive all or part of your principal amount.

Unlike lawyers, debt collection agencies typically do nothing but collect debts. As a result, you often get a different experience, more streamlined processes, and typically online access to your cases—something very few lawyers offer.

Data is also worth mentioning! Debt collection agencies often have a much larger database and have handled far more cases over time than a lawyer. Data helps debt collection agencies understand what works best in the debt collection process—knowledge that benefits you.

Is there anything that a debt collection agency isn’t quite as good at? Yes, of course! Very few debt collection agencies are skilled at handling legally complex cases—cases that may not start out as actual debt collection cases, or where the parties don’t agree on the claim.

Fortunately, most debt collection agencies therefore have skilled attorneys or legal professionals on staff—so the case can be seen through to the very end.

Most debt collection agencies can therefore offer the best of both worlds: low prices, efficient case handling—and the option of legal support, should it ever be necessary.

Court of bailiffs

Both lawyers and debt collection agencies may file your debt collection case with the bailiff's court. There is no difference between the two in this regard.

Interest and Fees

Lawyers and debt collection agencies may charge the same interest rates and fees—there is no difference in this regard. See the current debt collection costs and fees here.

The Cost of Debt Collection

The cost of debt collection services provided by a lawyer or a debt collection agency can vary widely. Typically, lawyers charge based on fixed rates, while (many) debt collection agencies operate on a “no cure, no pay” basis—meaning they earn their income from the fees they charge. You should research this carefully before making a decision.

Overview of Your Case

Most debt collection agencies now offer online access so you can track your cases. Unfortunately, this is a service that very few lawyers offer.

Check it out before you make your choice; it’s often a big advantage to be able to track, communicate about, and close your cases online.

What should I choose?

Whether you choose a debt collection agency or a lawyer is up to you, but keep in mind that debt collection agencies are often specialists in this field. Very few lawyers deal exclusively with debt collection. If you wish to hire a lawyer, we recommend that you choose one with many years of specialized experience in this area.

In addition, we also believe you should choose a provider that offers you online access to your cases so you can stay up to date on the process, the status of your cases, and all communications.

Collectia – 150 Years of Experience as a Debt Collection Agency

Collectia A/S has more than 150 years of experience in debt collection and develops new solutions every single day for our clients and their customers. We keep pace with digital developments and utilize the latest digital solutions. This makes the debt collection process easier for both debtors and creditors. As a result, we are now among Denmark’s most effective debt collection agencies.