How Much Does A Collection Agency Cost?

Consumer debt is likely over $4 trillion dollars according to the Federal Reserve and a percentage of those debts will be delinquent. For companies facing this situation they turn to debt collection agencies. But how much does a debt collection agency cost?

The answer is, it depends. Some charge a flat fee while others work on a contingency basis, where they are only paid when they successfully recover the debt owed. The flat fee approach involves charging a specified amount to undertake collection, regardless of success; this can cost between $10 and $15 per account but will vary depending on the agency.

Contingency based payment models mean the agency only charges the client when they successfully collect from the delinquent debtor. This fee is based on a percentage of the money owed, ranging from 25% to 50%. Factors such as the length the debt is overdue and the size of the debt will impact this percentage.