All collection agencies are not the same. Caution 80% of all new collection agencies go out of business within their first 5 years of opening! Therefore, even though you may be quoted the same rates and fees by competing collectors, it does not mean the level of effort to recover your loss will be equal or that they will still be in business the next time you call them. If you are quoted too low of a rate or fee you should be suspicous of the quality of service and effort your account will receive.

Consider if you had a 10% rate quoted to you and the agency recovered a BIG ZERO for you, then your goal to collect your money is a BIG ZERO also. Moreover you may have ruined your chances to ever collect your money because the best collection agencies do not accept accounts previously placed with another agency, the account would be known as a second or secondary account. Secondary accounts accepted for collection rarely receive a rate under 50%.

Before you chose any collection agency with a super low rate, make sure the rate quoted to you by the collector is comparable to the effort you anticipate is required to get your debtor to pay. In most cases a rate under 25% for balances under $2500 is going to yield nothing more than a few collection letters being sent out. If letters alone can collect your money, then you probably have not put enough effort into recovering your money yourself.

The most important factors that shape a realistic rate or fee are guided by the collector knowing the following information:

• Type of account (Consumer or commercial debt)
  


• Age of your account (Date of last charge or Date of last payment)
  


• Balance of your account (If assigning more that one, what is the average balance)
  


• Is the account disputed or just being ignored?
  


• If the account is uncollectable by normal means are you willing to go to court?
  


• Is this a one time assigment or is there a possibility you are going to have other debts to assign on a regular basis.
  

If you are considering using a collection agency and all the factors just listed above are not being asked of you by whom you are considering, then you should be very wary about the experience of the collector you are considering doing business with.