Debt Collection Commission Rates

Let’s talk about debt collection commission rates!

Unfortunately, when many clients are advised of the commission rates to collect a debt, they often decide not to proceed any further as they feel they will lose too much of what they are owed.

Debt collection may be a challenging procedure, but it is sometimes required to recover overdue debts.

Creditors engage debt collection companies to recover outstanding bills from delinquent clients.

The commission prices paid by these organisations, however, might vary greatly.

In this article, our debt collectors will define debt collection commission rates, explain how they are determined, and tell you all you need to know about them.

What Are Debt Collection Commission Rates?

Debt collection commission rates are the fees charged by debt collection agencies for their services.

These fees are usually calculated as a percentage of the total amount of debt collected.

The commission rate can vary depending on the age and amount of the debt, the type of debt, and the difficulty of collecting it.

How Are Debt Collection Commission Rates Calculated?

Debt collection commissions are usually determined as a percentage of the total amount collected.

If a debt collection firm is engaged to collect a $10,000 debt and their commission rate is 20%, they will charge $2,000 for their services.

A debt collection agency's commission rate might vary based on several criteria, including the age and quantity of the debt, the kind of debt, and the difficulty of collecting it.

Factors That Affect Debt Collection Commission Rates

Commission rates vary across different debt collection agencies; however, the average commission rates range from 20% to 40% and they are calculated on the amount recovered. 

The commission rate will often vary depending on a following factors:

  • Age of debt: higher commission rates are often claimed on older debts as they are often a lot harder to collect, therefore engaging a debt collector when the debt is 30 + days overdue is best.
  • Amount of debt: if the debt amount is on the smaller side, the commission rate will often be higher as the profit margin for the collection agency is minimal.
  • Number of debts referred: If you refer a ledger of debt, the collection agency will often propose a reduced commission rate given the volume being referred and also the potential for ongoing work in the future.

Breakdown of Costs

To break things down, if you have a debt of $10,000.00 and the commission rate is 20% and the collection agency recovers the full amount of the debt, the fee you are required to pay is $2,000.00 + GST.

Proceeding with debt collection

  1. Debt - $10,000.00
  2. Commission fee - $2,200.00
  3. Amount recovered and paid to client - $7,800.00

Not Proceeding with debt collection

  1. Debt - $10,000.00
  2. Amount recovered and paid to client - $0.00

I know which option looks more appealing; don’t you agree? 

On the other hand, another encouraging aspect is that many collection agencies offer “no collection, no fee,”.

Essentially what this means is, if the agency is unable to recover your debt, no commission fees are payable.

This is really applaudable considering the amount of time and work that is put into some matters, and means we only get paid if you get paid.

How to Advance Debt Collection Charge?

At Advance Debt Collection, our standard commission rates are:

UNDER $1,000 35%
$1,000 TO $5,000 30%
$5,000 TO $20,000 25%
$20,000 TO $100,000 20%
OVER $100,000 15%

If a file is worked properly, a lot of time goes into opening the file and preparing correspondence such as conducting work on the file, including (amongst other things):

  1. Letters of demand and arrangement letters.
  2. Negotiating arrangements or reduced settlement offers.
  3. Managing disputes.
  4. Making demands for payment; and
  5. Reviewing files where follow ups are required as promises have not been met.

At Advance Debt Collection, we pride ourselves on the amount of time that is put into each matter and always know we have gone above and beyond to recover the debt, whether we are successful or not.

We think it is important to consider that whilst you are required to pay a fee if we are successful in recovering your debt, if you choose not to proceed, essentially you are recovering nothing when you have a chance of recovering a substantial portion of what you are owed. Surely recovering something is better than nothing, right?

As per the example above, it is better to be net-positive +$7,800.00, than net-negative -$10,000.00.

Why Do Debt Collection Commission Rates Vary?

Debt collection commission rates can vary for several reasons. These include:

  1. Competition.
  2. Negotiation.
  3. Complexity of the Debt.

We will explain these in more detail below.


Competition among debt collection agencies can lead to lower commission rates. Agencies may lower their rates to attract more business. Basically, a race to the bottom!

However, at Advance Debt Collection, we provide a premium service and do not limit the collection efforts to a single letter and maybe a phone call (like some other debt collectors).

At Advance Debt Collection, we put a lot of work into our client’s files to maximise their chances of recovering the debt.


Debt collection commission rates are often negotiable.

Creditors may negotiate with debt collection agencies to get a lower rate.

At Advance Debt Collection, we are certainly open to negotiation of our commissions, having regard to a number of different factors (such as multiple debts, etc).

Complexity of the Debt

The complexity of the debt can affect the commission rate charged by a debt collection agency.

More complex debts may require more effort and resources to collect, leading to a higher commission rate.

When can commission costs be recovered from the debtor?

In some cases, collection costs can be recovered.

If you have a written contract that has been executed by both parties correctly, debt collection fees can be recovered from the debtor if there is a clause in your contract that allows for collection costs to be recuperated. 

If your current contract does not allow for this, perhaps it is time you reviewed and updated your terms and conditions.

Debt Collection or Legal Action?

Further, proceeding with legal action can be costly, therefore in many cases, particularly when the debt amount is smaller, it is often more economical to engage a debt collection agency in the first instance. 

You can always proceed with legal action down the track if recovery has been unsuccessful and the beauty is, it hasn’t cost you anything and the attempts to recover the debt made by the collection agency can be included in your pleadings to show you have taken all reasonable steps to try and recover the money that is owing to you.

If you would like to discuss this further, give us a call today, we would love to hear from you, or you can simply submit your debt online.

Debt Collection Commission Rates FAQ

At Advance Debt Collection, we get asked questions about commission rates all the time.  Here are a few.

How are debt collection commission rates different from contingency fees?

Debt collection commission rates and contingency fees are both types of fees charged by debt collection agencies, but they are calculated differently.

Commission rates are typically calculated as a percentage of the total amount of debt collected, while contingency fees are calculated as a percentage of the amount of debt recovered.

In other words, commission rates are based on the total amount of debt owed, while contingency fees are based on the amount of debt collected.

Can creditors negotiate debt collection commission rates with agencies?

Yes, creditors can negotiate debt collection commission rates with agencies.

It is important to do your research and choose a reputable agency with a proven track record of success before negotiating the commission rate.

Keep in mind that commission rates can vary significantly among different agencies, so it is important to shop around and compare rates before making a decision.

What is a typical debt collection commission rate?

There is no one-size-fits-all answer to this question, as debt collection commission rates can vary depending on several factors, including the age and amount of the debt, the type of debt, and the difficulty of collecting it.

In general, commission rates can range from 15% to 50% or more, depending on the circumstances.

How do debt collection commission rates impact the amount of money I can recover as a creditor?

Rates can impact the amount of money you can recover as a creditor, as they are deducted from the total amount of debt collected.

However, hiring a debt collection agency can increase your chances of recovering unpaid debts, which can ultimately result in a higher overall recovery amount.

It is important to weigh the potential costs and benefits before deciding whether to hire a debt collection agency.

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