Credit - Collection Lawyers, Part 1

There are two types of lawyers that will attempt to collect debts-in-house and contract. In-house lawyers are payroll employees of the creditor or collection agency. Contract lawyers don’t work directly for the creditor and often have other clients as well. In collection matters, contract lawyers often will not get paid unless they collect money, but in-house lawyers will usually get paid a salary and perhaps even a bonus based on debts collected. In either case, they are highly motivated.

Large banks usually have in-house attorneys, while smaller credit unions often do not. Collection agencies also likely will have payroll attorneys (some collection agencies are owned and operated by attorneys). Of course, an attorney representing a doctor with a small practice will likely be a contract attorney. The size of the organization will often dictate what type of lawyer it has.

Regardless of which kind of lawyer you come across, they all have the same basic criterion for deciding whether to sue: whether there’s money in it for them and their clients (in the case of contract lawyers) or the creditor they work for (in the case of in-house lawyers).

A lawyer will assess the situation based on how much is owed and what he or she can take. It’s just that simple. If you have wages to garnish or assets to seize and the amount is worth the trouble, they will sue if they can. However, settling is always preferable, since litigation costs money and there’s always a chance that the creditor will get a judgment but still never collect. Debtors frequently have numerous obligations, and creditors that have obtained judgments have to wait in line behind other creditors with higher priority (e.g., the IRS or a mortgage lender). If creditors sense that they may have to “take a number,” then this will impact their decision as well.

Keep in mind that this rule is not hard-and-fast, since people generally make bad decisions no matter what their education and intelligence quotient. In fact, some lawyers and creditors are downright stupid, and I’ve seen them make bad decisions with regularity. This is why you have to bring them around to a more prudent line of thinking, primarily using your negotiation skills and positioning yourself so that the hurdles become insurmountable, or at least appear to be so.