12th Jul 2012

I am frequently asked what a creditor debt collection attorney does and what he should know.  I found the following on the website Wisegeek.com which provides a good general description:

“A debt collection attorney is a lawyer that specializes in matters regarding unpaid accounts. They are often employed by major creditors, such as credit card companies, to collect unpaid debts from customers, but can also be employed by debtors. Some individuals choose to employ a debt collection attorney when they find themselves in difficult financial situations, such as when they are preparing to file for bankruptcy or when they are being sued.

Debt collection attorneys can be used by both parties when financial disputes arise. The attorneys are often able to tell whether it would be more profitable to pursue litigation or to use credit counseling to ease the anxieties of both parties. In some cases, they may even advocate for the discharge of debt or a restructured payment plan.

A debt collection attorney differs from an agent at a collection agency in a few key ways. Most importantly, collection agencies operate solely on behalf of creditors. This means that debtors cannot employ a collection agency to help them assert their legal rights. Many collection agencies are in-house finance branches of major corporations, such as credit card companies.

Often, a collection agency represents the first stage in the debt-collection cycle. Once the debt collection process has moved past the expertise of the collection agency, it is handed off to a specially trained debt collection attorney to pursue legal action. Some companies, however, choose to use attorneys at the beginning of the debt collection process in order to make concerns appear more serious.

When creditors employ debt collection lawyers, they often do so as a last resort. Large corporations use debt attorneys to assert creditor rights to asset collection when the debt becomes unmanageable. Debt collection attorneys, when in the service of the creditor, are able to use legal terminology that typically is unfamiliar to common citizens to collect debt. In extreme cases, they may even the court to garnish wages or sell valuable liquid assets.

It is also possible for debtors to employ a debt collection attorney on their own behalf. Debtors that use debt attorneys often do so when they are being sued by major creditors. If the amount of the debt is large, most legal systems require that an individual employ a lawyer in order to appear before a bankruptcy judge. In these cases, debt collection attorneys represent their clients by using their specialized knowledge about debts and assets.” (Source Wisegeek.com)

I should add that a good collection attorney must be able to act quickly to file litigation and to proceed to collect any amounts due.  This includes quickly seeking pre-judgment remedies to protect the client and preserve potential assets before the assets disappear.  The importance of this cannot be underestimated since debtors have a tendency to hide assets and to otherwise try to avoid paying the underlying debts.


A good collection attorney needs to know fundamental bankruptcy law and procedures.  Collection attorney representing secured creditors, must be able to move quickly to seek relief from the automatic stay of bankruptcy  (11 U.S.C. section 362) to allow the creditor to quickly realize the underlying collateral or obtain appropriate orders in order to satisfy the debt or to seek adequate protection so the collateral does not disappear or otherwise diminish in value.  Collection attorneys must be able to advise their clients about debtor’s who may have acted dishonestly, may have misrepresented their assets and liabilities on the debtor’s bankruptcy schedules and/or statement of financial affairs, or may have simply used secured collateral improperly before or during a bankruptcy proceeding.

Importantly, collection attorneys must understand that judgments obtained in State or Federal Courts may have a substantial impact in a subsequently filed bankruptcy proceedings.  If a debtor has improperly committed fraud or misrepresentation, has improperly used collateral or converted the assets subject to the creditor’s security interest or subject to a consignment agreement, good collection attorney’s need to include these causes of action in the initial collection complaints and attempt to include specific findings in the resulting judgments.  These types of judicial findings may have collateral estoppel and/or res judicata effect in the subsequent bankruptcy matter and the ability of the debtor to discharge the debt.

In addition, it is important for the creditor debt collection attorney to have open and ongoing communications with the client.  This can include a realistic assessment of the client’s case, collection possibilities and the real potential costs of the litigation and, alternatives thereto such as mediation, arbitration, the referral to small claims court for low value cases or simply suggesting direct negotiations with the debtor.

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