3 Reasons Creditors are Hesitant to Utilize Collection Agencies

Collection Agencies are certainly not going to win any popularity contests. To be sure, recent surveys have ranked collection agencies in the bottom three desirable jobs; the only jobs ranking lower were used car salesmen and being a member of Congress. (two reasonably dubious jobs in their own right)

Oddly enough, this disdain for collection agencies seems to transfer to referring delinquent clients for collection. There is a general feeling of betraying a debtor when sending him/her for collection; even though the debtor may owe the creditor a substantial amount of money.

What is that about?

The question is not an easy one to answer and one can only make assumptions based on experience. While I have listened to a myriad of poorly reasoned excuses for inaction on the creditors part, the excuses generally have fallen into three broad categories.

Reputation of the Company

Many companies fear the negative connotations associated with collection agencies may have an adverse effect on their business. Let’s face it; debtors often times become enraged, if not downright irrational, upon notification that they have been turned over to a collection agency. From the debtors point of view, this is the ultimate betrayal. Debtors who feel this betrayal often go to unusual lengths to express their outrage.

The facts surrounding the debtors claim are usually dubious. Generally speaking, the debtor generally owes the money ( with some exceptions) and the real issue is the notion of “being called out on the carpet” and being asked to pay their debt in a responsible way. It mystifies me when a debtor freely acknowledges the debt but is deeply offended that the creditor, after numerous attempts to collect the debt, turns the account over to a company who specializes in collecting money from debtors who are slow to pay, or even refuse to pay.

The end result of this financial tug-of-war can be a raft of negative publicity for the creditor as the debtor spins various tales of atrocities visited up him/her. Of course, nothing could be farather from the truth, as all collection agencies are legally bound in their collection activities by a fairly restrictive law enacted in 1977, the Fair Debt Collection Practices Act.

Fear That The Creditor Did Something Wrong

It is not uncommon for a debtor to claim the creditor’s work is somehow inadequate or slipshod. Careful investigation by the creditor is required to mitigate any deficiencies the debtor claims. That being said, it is also not usual for the debtor to claim the creditor was deficient in his/her work in order to extend the length of time before payment. (Note: in my experience, it is a veritable impossibility to please debtors using this defense as deficiency after deficiency tends to pop up throughout the collection process whether real or imagined)

The possibility of public exposure for non-existent deficiencies can be cause for creditor alarm. I recently read several posts on Craigslist by spiteful debtors claiming they were ripped off by their creditor. This is not the kind of publicity any firm cares to endure. It can be an unfair and deceptive methodology employed by debtors to mitigate their indebtedness. It also places an undue burden of proof on the creditor who may be transformed from collecting a grossly-delinquent invoice to defending his business ethics. It’s an unethical and immoral tactic that a few debtors use to defer payment or attempt to cancel the invoice entirely.


This particular problem is an entirely creditor side malady. I believe the cause for creditor procrastination to turn long-overdue accounts over for collection is simply a lack or prioritization. Often times, far less important duties are given prioritization over the job of collecting money.


Given the low-level adversarial relationship that often evolves when a bill becomes to a collection agency, it is easy to understand why overdue invoices can create cognitive dissonance at some level. The best and positive outcome would have the debtor happily paying the bill and everyone lives happily ever after. I believe that most debtors pay their bills and life is good. On the other hand, there is the odd debtor who bucks and snorts at every stage of the process and everyone doesn’t live happily ever after. In short, I think many creditors procrastinate because they just don’t want to deal with the effects of the collection process.

On a final note: Before addressing the reasons creditors are hesitant to utilize collection agencies let’s get one incontrovertible maxim straight: THERE IS A DIRECT CORRELATION BETWEEN THE AGE OF A DEBT AND THE ABILITY TO COLLECT THAT SUCCESSFULLY. The longer you wait, the more it costs in terms of real money.

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