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Many businesses will choose to place their accounts with a collection agency, while others prefer to go straight to litigation through an attorney.  Both strategies have tangible benefits to the business that chooses it.  However, the question remains: “Why not do both?”

  While many collection agencies will have an attorney on retainer; Spears, Dewitt & Hall (SDH) has an in-house attorney on staff.  This allows SDH the flexibility to place accounts into litigation when needed and to immediately file suit upon accounts which are of a size that the client typically places for litigation with an outside law firm. 


  Proceeding to litigation on an account can have several benefits.  First, debtors are more likely to place a priority upon paying obligations that have proceeded to litigation.  Second, rather than having a statute of limitations of only a few years in which to collect; in many states a judgment is valid for ten years and may be extended indefinitely. 

  There are two primary means by which a judgment can result in real dollars added on a client’s bottom line.  First, should a defendant not voluntarily pay a judgment many states will allow the judgment holder to pursue post-judgment discovery via subpoenas and written discovery to ascertain the existence of the defendant’s assets and bank accounts.  The courts can then order that those assets be liquidated to satisfy the judgment.

  Second, given the permanent nature of a judgment, a debtor’s financial condition may have markedly changed since the time the judgment was entered.  A negative entry on a credit report may not be a deterrent to a debtor in their early 20s as their may be no intention to make a purchase large enough for credit history to be a significant issue.  However, within a few years the debtor may acquire financial stability and inquire as to purchasing a house or a new automobile; purchases that are often impossible to complete until the judgment has been resolved.  This often leads to a debt being paid, with interest, well after it would have ordinarily been extinguished by the statute of limitations.

  The recent establishment of the Consumer Financial Protection Bureau (“CFPB”) and its increased regulatory framework has enacted a new environment of liability for businesses.  Unlike the Fair Debt Collection Practices Act which applied primarily to third party collection agencies; the CFPB allows for penalties and fines to be levied against companies’ in-house collection efforts.  Even more significantly, the CFPB allows for vicarious liability.  Meaning that a company can be held liable and fined for actions undertaken by its’ outside collection agency. 

  These recent changes make it more important than ever that clients be aware and assured that their outside collection agencies are following the applicable regulations and are fully prepared to be audited.  SDH’s in-house attorney actively participates in setting and managing our compliance and employee training programs.  This insures that our educational programs always reflect the latest developments and emerging case law that affects our industry.  Thus, reducing the risk of SDH running afoul of governmental regulations and the risk that our clients will be held responsible for the acts of an outside collection agency.