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There are two ways that collection agencies charge for their services. The first is a flat or fixed fee for services. An example would be Agency A will send out 3 letters and make one phone call for $10. This is the usual method for smaller debts. For larger debts the company charges on a contingency basis. This means that they charge a percentage of the money collected. The fees also go up if the agency involves a lawyer in the proceedings. This can raise the percentage from an average of 20-35% to about 50%. A good agency will first exhaust all methods available to them to persuade your debtor to pay without legal involvement.
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