What is the difference between a collection agency and a law firm collection?

• A. A collection agency performs litigation while a law firm does routine calls.
• B. A collection agency conducts routine collection efforts; a law firm may pursue litigation and legal actions.
• C. Both are identical.
• D. Only law firms conduct debt collection.

Answer: (B)

The main idea is the level of action involved in chasing a debt. A collection agency handles routine collection efforts outside the court system—they contact the debtor, send notices, make calls, and negotiate payment plans or settlements through non-legal channels. A law firm collection may take it further by pursuing litigation, filing lawsuits, obtaining judgments, and using enforcement tools like garnishment or liens. Often creditors start with a collection agency and turn to a law firm when legal action becomes necessary to recover the debt. That combination—with routine outreach by the agency and potential court action by a law firm—best fits how these two typically differ. The other options misstate the roles: agencies don’t typically file lawsuits as their core function, and law firms aren’t the only entities that collect debts.