It can be both worthwhile and profitable to learn How to Start a Debt Collection Business. With growing consumer debt and therefore a greater need now than ever for debt collectors, this is a great time to break into the field and start on the road to financial independence. Essentially, all a debt collector does is help businesses collect delinquent debts through the telephone and mail. This means low overhead and start up costs making learning how to start a debt collection business a great first step towards self employment and the freedom that comes with it.

Estimated start up costs and pricing guidelines: The low overhead and start up costs make a debt collection business an ideal choice for people looking to start their own business. With a personal computer, cell phone, fax machine, and other home office essentials such as a printer, a person has just about all of the essential equipment for less than $1500 if they shop around for bargains. But part of the start up costs should include some allotment to pay online investigation companies to help you track debtors.

While prices vary, a good rule of thumb is that learning how to start a debt collection agency will generally net you 20-30% of what you collect on the behalf of business clients. Of course debt is classified and if you start out trying to collect older debts, there is the chance that the commission can go as high as 50% or even 60%. Of course the commissions are higher because the chances of collecting these older debts is less. All told, pricing generally depends on the likelihood of collecting the debt and that is generally based upon the age of the debt.


Recommended experience, skills, and training: Without question, it is a mistake to think about learning how to start a debt collection agency if you do not have any debt collection experience. The industry demands a lot of patience, empathy, and a fairly thick skin in order to have a decent chance for success. If you have not experienced the demands and stress involved in debt collection, then you may at least want to consult with some people in the industry before thinking about a business in this field.

Marketing tips: As other businesses will be your potential clients, you are going to want to create and maintain a website that looks as professional as possible. Budget permitting, you may want to hire a website creator and a freelance writer to help you create the best website possible and achieve higher search engine rankings. You will also want a listing in the Yellow Pages and it may be a good idea to join local networking groups to help you in spreading the word about your company.

Financing sources: Being a home based business in most cases (at least in the beginning), financing options are limited and a conventional business loan from a bank will be difficult to obtain. However, with good credit and a well conceived business plan, it is possible to receive a business loan from your local bank. Grants from the local, state, and federal governments are available and can actually be a great source of financing. If this is not an option for you then you may have to learn how to start a debt collection agency with your savings or the generosity of friends and family.

Income Potential: The income potential for the first full year of operations can be in the high five to low six figures. Depending on the type of debts you attempt to collect and the fees you are able to negotiate, debt collection can truly be a very profitable business. If you are wanting to know more about how to start a debt collection business, a good book to consult is “Start a Home Based Collection Agency,” by Robert Bill.