Debt Collection

When legitimate creditors are unable to collect debts independently, or debtors avoid contact, these cases can be entrusted to private investigation agencies specializing in debt recovery and skip tracing.

Debt collection, commonly referred to as “debt recovery,” has evolved significantly over the last two decades. Previously, debt collection agencies were rampant, with many linked to organized crime. To regulate the industry, the government ceased issuing business licenses for debt collection agencies and cracked down on violent debt recovery practices.

Today, consumers often equate private investigation agencies with debt collectors. However, the likelihood of illegal recovery methods by private investigators is minimal. Their primary income stems from investigative services, particularly surveillance and evidence collection. Divorce investigations, including infidelity cases and support for claims involving extramarital affairs, account for over 60% of their revenue.

Debt Collection Fees

Traditional debt collection agencies typically charge a contingency fee of 50%, meaning they retain half of the recovered debt as compensation. Private investigators adopt a similar structure for debt negotiation services. For cases with a high probability of recovery, particularly those backed by legally enforceable judgments, fees can be negotiated to a 40/60 split, allowing creditors to reclaim up to 60% of the debt.

However, creditors must not assume that merely handing over claims to an agency guarantees recovery. In cases of “bad debt” where the debtor is untraceable, creditors unwilling to invest in skip tracing or travel expenses risk rendering their claim worthless.

Debt recovery is often a supplementary service for private investigators, as many debtors are challenging to locate without specialized expertise. Particularly for debtors evading creditors, outdated addresses are typically of no use. Debtors often move or disappear, leaving creditors with no trace.

The Role of Private Investigators

Private investigators have superior skip tracing abilities compared to conventional debt collectors. With persistence and thorough investigation, they can locate debtors and encourage them to engage in amicable debt negotiations. This method significantly improves recovery rates and enables debtors to confront their obligations responsibly.

Pressuring debtors into desperate situations is not the hallmark of a skilled debt collection expert. Successful professionals prioritize negotiation and collaboration to achieve mutually beneficial resolutions.

For creditors capable of direct negotiation, private investigators can provide skip tracing services exclusively, ensuring that debtors are located promptly and efficiently.