Collecting funds due from an unpaid loan or unpaid account can be a difficult process.  Whether it is a personal loan or a business-related debt, you may be asking yourself what should I do and how far should I go in trying to collect?  When Individuals and businesses have given up on their own attempts to collect a debt, two options remain: a debt collection agency or a debt collection attorney. 


At its core, a debt collection agency is a company that lenders and creditors hire after the individual or business has failed in its own attempts to collect a debt.  Most collection agencies work on behalf of the creditor and attempt to collect their debts for a fee or percentage of the amount collected pursuant to their efforts.  Collection agencies have countless clients, debtors, and collection matters at any one time, as they are usually the first line of defense for a creditor to recover a debt or an unpaid account.  Methods that collection agencies use are:

  • Phoning the debtor at the debtor’s home or place of business
  • Sending late payment notices through the U.S. mail
  • Contacting a debtor’s family, friends and neighbors for information
  • Notifying credit reporting bureaus of late payments and delinquent accounts

Debt collection agencies usually handle a large volume of consumer debts such as credit card accounts, unpaid hospital or medical bills, or unpaid utility bills.  Creditors who are owed a few hundred or even a few thousand dollars should consider a debt collection agency since they are equipped to handle a large number of accounts and their collection methods are rather limited.


A debt collection attorney, on the other hand, has a litany of legal remedies at their disposal to pursue those debtors who refuse to pay.  Debt collection attorneys avoid the harassing phone calls and usually do not report late payment or defaults to the credit reporting bureaus.  Instead, debt collection attorneys will take the following steps:

  • Send a demand letter to the debtor threatening legal action
  • Initiate a lawsuit against the debtor
  • Obtain a money judgment
  • Enforce the money judgment 

Enforcing the money judgment means to utilize the legal process for obtaining information on the debtor’s assets, seizing those assets, and using those assets to satisfy the judgment obligation.  A money judgment in Pennsylvania can also remain as a lien on any real property owned by the debtor.  This means that the debtor must satisfy the debt before the debtor can sell a home or refinance a mortgage.

Debt collection attorneys can also prepare a written settlement agreement in the event the parties reach an agreement for payment of the debt.  For example, if the debtor wants to make monthly installment payments, an attorney can create a written contract that not only specifies the payment terms, but it may incorporate other important provisions such as interest and the recovery of attorney’s fees in the event of a default.

Debt collection attorneys charge either a percentage of the recovery or an hourly rate for their time.  Payment structures are agreed to in advance and usually take into consideration the size of the debt, the solvency of the debtor, and how long the debt has been unpaid. 


Recent investigations by the FBI, the Federal Trade Commission, and the Consumer Financial Protection Bureau have revealed that debt collection agencies sometimes engage in improper and illegal debt collection methods, including falsely identifying themselves as law enforcement and making improper threats to the debtor. This type of behavior is prohibited by the Fair Debt Collection Practices Act and has even led to a number of recent arrests.  As such, it is important to do your due diligence when hiring a collection agency.  

Debt collection attorneys are held to a high ethical standard.  Attorneys are fiduciaries which means they cannot act for themselves, but they must act in the best interests of the client.  Pennsylvania attorneys are also bound by the Rules of Professional Conduct, which is a set of rules and guidelines that attorneys must follow; otherwise, they can be disciplined by their licensure board.  Before hiring an attorney, you should discuss your case with the attorney and assess the attorney’s experience and overall attitude.  You may not want an overly aggressive lawyer or a lawyer who may not go the extra step.


Lawsuits initiated by a lawyer are often enough to compel a debtor to “voluntarily” resolve the dispute through payment in full or a settlement. Debtors typically do not have valid defenses as to why the debt has not been paid and rarely want to incur any legal costs when that money can be used to settle the debt.  However, if a settlement is not reached or if the debtor fails to respond, a judgment can then be obtained.   One could argue that this is the most efficient method; however, all collection matters are different and sometimes it just takes a phone call or a letter for the debtor to pay.


For larger debts, an attorney should be used.  For smaller consumer debts, a collection agency may make the most sense.  In any given case, the creditor should perform due diligence to make sure that the agency or the attorney is experienced and willing to give your case the attention it needs.  

The Martin Law Firm, P.C. is located in Pennsylvania.  Our debt collection attorneys have pursued the recovery of outstanding debts for our clients since 2001.  We represent individuals and many types of businesses.  Call us today for a free case evaluation at 215-646-3980.