International Forwarding

International forwarding or legal forwarding are the terms used by collection agency insiders when they must retain the services of an attorney in a foreign jurisdiction if the agency is unable to collect on their own.

Generally the practice of most collection firms throughout the United States, and for that matter, the rest of the world, is to automatically sue a foreign past due customer using an attorney in the debtor country. This is a long-established practice that has been satisfactory to creditors for many years. Unfortunately the original collection agency doesn’t have the ability to thoroughly research the debtor to ascertain the probability of recovery and ironically neither does the receiving attorney. Many times the creditor is suing blindly and incurring an even bigger loss due to suit filing fees and attorney fees.

Is Suing Blindly a Good Idea?

Rather than allowing your collection agency to follow the old established methods, we recommend a different approach. In today’s market, the creditor can ask that the past due customer be sent to a specific attorney or third-party debt collection agency in-country. The benefits to contracting with a collection agency in the debtors country is that, unlike most lawyers, they report your claims to the local credit bureaus.

Many times the account gets paid due to bureau reporting because you have “brought the fight” to their doorstep and have negatively affected their credit. An equally important benefit to contracting with a foreign collection agency is that they work on a contingency basis too. The agency will provide you with a very conservative estimate of recovery if legal action is required. They only get paid on recovery whereas a foreign attorney will be sending invoices for each step they may take.

So What Should a Creditor Do?

Just as in any industry there are good operators and bad ones – and collection agencies are no exception. We recommend using a collection firm, in your customer’s country that is an active member of ACA International or other professional associations such as The International Association of Commercial Collectors or the League of International Creditors. These professional associations vet their members very carefully, looking for proof of compliance, proper insurance and client trust bond coverage.

Don’t make a bad debt even worse by suing blindly. Be sure to ask your foreign attorney or agency to conduct a full pre-legal investigation first. This step is significantly less expensive than traditional alternatives.