Commercial Collection Agencies and Skip Tracing Services

One of the biggest problems that debt collectors often face is locating debtors. When a debtor moves to another house, city, state, or country, the collection agency often has no clue how to locate him. So, how does a commercial collection agency track runaway debtors? The solution is easy: skip tracing services. What is Skip tracing? Skip tracing is the process…

One of the biggest problems that debt collectors often face is locating debtors. When a debtor moves to another house, city, state, or country, the collection agency often has no clue how to locate him. So, how does a commercial collection agency track runaway debtors? The solution is easy: skip tracing services. What is Skip tracing? Skip tracing is the process of locating the whereabouts of a person for any number of reasons. In this case, outstanding debts.

Skip tracing services (Skip tracers) are companies whose sole mission is to locate individuals – in this case, debtors – who have relocated without giving their new contact details to the collection agencies. Skip tracers are employed to help commercial collection agencies find the addresses and contact information for debt collection purposes.

You may wonder how skip tracing services locate people; the process is actually rather straightforward. The easiest way is to use the debtor͛s social security number. Social security numbers are run through various credit bureaus allowing them access to ͞header͟ files from the debtor͛s credit files and/or credit reports. A header file contains just the basic information needed to locate the debtor such as name,address and in some cases, place of employment. Though this information may not seem like much, it is often times all the skip tracers need to help debt collectors find their debtors.

If the skip tracing services are unable to locate the debtor through their social security number, they can perform a national identifier search. Simply put, this is an “old school” system that uses the debtor͛s last known residence as well as his/her name to find their new location.

Skip Tracing Services may use the following resources:

  • Online directories, Phone books, Social Sites and search engines – Debtors may have accounts and profiles across various directory websites and Social Media sites like Facebook, Livejournal, Twitter, Instagram, and others. If not, skip tracing services can use search engines to search for news articles and posts that people on the internet who may have written entries about them or even posted pictures.
  • The Department of Motor Vehicles (DMV) – If the debtor drives a vehicle or has a license registered, it is likely that the DMV will have recent information about the debtor’s whereabouts.
  • Employers – If you know the debtor͛s last place of employment, skip tracing services can approach their boss and inquire about their current employment status. Even if the debtor has moved on to a different job, the employer may still have information that can help the skip tracer locate him
  • Associations, Affiliations, Organizations, and Groups – If the debtor has a specialized occupation, like Engineering or Medicine, they must have membership in certain organizations. Skip tracing services will try to search these various groups to find the runaway debtor.
  • Former contacts – Skip tracing services may visit old neighbors, friends and relatives to obtain information about the debtor͛s current location.

Note: when trying to obtain information about a certain debtor, skip tracing services should never falsely represent themselves as a member of law enforcement or a detective. It is in your best interest to ensure the commercial collections agency you use for your debt recovery steers clear of any and all misrepresentation.

Debt Collection Strategies – Invoice Finance Charges

Are your debt collection strategies like most business owners or are you cashing in on slow paying customers by implementing Invoice finance charges and interest? Debt Collection Strategies: Interest & Finance Charges…

Are your debt collection strategies like most business owners or are you cashing in on slow paying customers by implementing Invoice finance charges and interest?
Debt Collection Strategies: Interest & Finance Charges

Imagine for a moment applying for a loan at a bank. You sit down with the loan officer and somehow manage to obtain a loan for $5,000 at 0% interest. Sounds a bit far-fetched and a little foolish on the part of the bank, doesn’t it? After all, why would a bank loan you money without interest? There’s nothing in it for them; there’s no financial gain for them in taking the risk

However, that’s exactly the kind of “foolishness” you and your business are engaged in with your debt collection strategies if you are not charging interest on your delinquent accounts. In fact, it’s even more so. After all, banks don’t really need the money, however, your business does.

Most businesses are in constant need of capital. In such cases, it is common for a business owner to borrow money from some sort of financial institution, be it a bank, private lender or other business capital. Regardless of the source of the loan, the business will have to pay a finance charge and interest on the money that they borrowed. And yet, no finance charges or interest payments exist in their debt collection strategies and invoicing system when attempting to collect the monies they are owed.

You may find it surprising that when implementing interest or finance charges into your outstanding debts, not only will payment be made faster, you will often receive the interest payment as well. It is a well-known fact that most companies will pay interest bearing invoices first and will relegate non-interest bearing invoices to a later date, often waiting until collection procedures have started. Most businesses use a revolving line of credit. By not paying the outstanding bill, your customer is able to earn, you guessed it, interest on that money

A question you need to ask is how important your services or products are to the vendor. If you are non-essential to the customer, you may find your invoices overlooked in favor of more ͞essential͟ suppliers. Having implemented finance charges into your invoices gives you leverage over the other vendors who do not. Remember, when sending an invoice to a customer, you are competing for their next available accounts payable dollar. It is how well you compete for that dollar that determines your success.

Another factor to consider, by having a finance charge in place, you gain leverage over your customers by having the ability to waive the finance charge in lieu of timely payments.

By applying interest/finance charges to your accounts payable and debt collection strategies, you will help speed up the payment of your invoices by training your customers to either pay according to your terms or to take advantage of your offer to extend your accounts receivables and pay the interest cost. What you will find is that customers will often prefer to extend the collection period paying the interest instead.

Think of debt collection strategies as a chess game: you need to outthink your opponent and stay at least one move ahead of them.

Debt Collection Software VS. Hiring a Collection Agency

Debt collection software are programs designed to help companies track debts. These software programs are designed to keep track of your outstanding receivables, payments owed, fines, penalties and other matters concerning the accounts of debtors. But is it beneficial for a company to buy and use one of these software tools or is hiring…

Debt collection software are programs designed to help companies track debts. These software programs are designed to keep track of your outstanding receivables, payments owed, fines, penalties and other matters concerning the accounts of debtors. But is it beneficial for a company to buy and use one of these software tools or is hiring a commercial collections agency a more reliable option?
The Benefits of using Debt Collection Software VS. Hiring a Commercial Collection Agency
The Benefits of debt collection software
First of all, debt collection software can help you get organized. Instead of having piles of paperwork in the office, debt collection software can consolidate all the information in one place. At the same time, debt collection software can be easily updated. Once the debtor pays a certain amount, it can be easily recorded by the software. This way, you can keep better track of the activities in each account. You will have all the necessary information, including the date and time payment was made and the amount that was paid.

Second, debt collection software is a great way to keep track of your correspondence with your outstanding accounts. Debt collection software has features that allow you to record the exact day and time the collection letters were sent–– In some cases, debt collection software can even record portions of phone calls. If ever the case goes to court, you can use the software to show evidence that you tried to maintain correspondence with the debtor.

Lastly, using debt collection software can often be a cheaper alternative to hiring a commercial collections agency to track accounts for you. For smaller businesses, hiring an external agency or person to do organization and collection of debts can be a bit costly. Debt collection software can prove to be a cheaper alternative

The Benefits of hiring a Commercial Collections Agency

Software programs are tools that can be used to retrieve the funds that are owed you. However, they are just that, tools. And a tool is only as good as the experience of the one using it. With a commercial collections agency, expertise and experience are two things that come with the service and normally exceeds even the most robust programs. Having that expertise working for you improves your chances of recovering some, if not all of the amount you are owed. Agencies often use professionals to collect your money using proven techniques and systems to optimize success

The primary benefit of using a commercial collections agency over debt collection software is the whole point of using them it in the first place: getting paid. By using an agency, you outsource the collection process allowing someone else to aggressively pursue your collection efforts. When debtors are contacted by a collections agency, a certain amount of fear is instilled into the debtor. Without that fear, debtors may be less inclined to respond and are often less concerned about the risks of not paying you what they owe. The consistent and aggressive pursuit of an agency offers a better return on investment for you recovering most if not all of your outstanding receivables.

Documentation is an important factor. A collection agency will keep track of all of their correspondence and collection efforts including direct mail, email, telephone calls, and in-person collection attempts, noting any comments made by the debtor and/or any amounts that have been paid. In doing so, collection agencies put together a timeline and help solidify your case should you choose to sue the debtor in a court of law. As mentioned above, debt collection software will keep track of all of your correspondence, however, it is up to you to input all of that data.

The most important factor of all: time. The software you use should help make debt collection easier. It should help you monitor the accounts, and in the event that the debtor disputes the debt, you can easily use the debt collection software to verify the nature of the debt. Though debt collection software can aide you in the tracking, documenting, and collecting of outstanding debts, it still requires time on your part to monitor the activities, input the information and pursue collection efforts; not to mention all of the time necessary to learn the software in the first place. Your focus as a business owner should be on your business; obtaining new customers and maintaining relations with existing customers needs to be a priority. You need to weigh your time and decide whether your business can afford you spending precious time performing your own collections or if outsourcing the task is the better option.

So which is it, Debt Collection software or Collections Agency?

In the end, it comes down to what is the best fit for you and your business. Whether you use a commercial collections agency or debt collection software for your recovery efforts, the choice is entirely up to you. With either option, there is no guarantee you will recover what is owed. With a commercial collections agency, there is usually a set of standard processes that they follow in an effort to retrieve the outstanding debts. With Debt collection software, whatever processes are used will be entirely up to you.

Collecting Past Due Accounts: When To Quit

A question often arises in our offices, “When should I stop my efforts collecting past due accounts?”
Unlike fine wines or select cheeses, past due accounts do not get better with age. Most businesses make the mistake of waiting twice as long as they should before handing over their accounts receivables to a commercial collections agency…

A question often arises in our offices,”When should I stop my efforts collecting past due accounts?”

Unlike fine wines or select cheeses, past due accounts do not get better with age. Most businesses make the mistake of waiting twice as long as they should before handing over their accounts receivables to a commercial collections agency. For instance, did you know your chances of collecting past due accounts in-house drop 12% every 30 days

When it comes to collecting past due accounts, it͛s important for business owners to remember, collecting on outstanding receivables is a financial process. Because we have an invested interest in our companies, we tend to treat collection as an ͞emotional͟ process instead of a financial one. Whether or not we make or lose money needs to be the determining factor when pursuing collecting past due accounts.

For example, Collecting on an invoice that is less than 120 days old holds an 80% success rate while dropping to 40% collectible after that time frame. Because we still see the debt as outstanding, we mistakingly apply the same amount of time and effort trying to collect those older accounts as we do the new ones. Our motto: Don͛t spend a dollar chasing after a dime.

Early warning signs it may be time to stop your collecting past due accounts efforts
Customer avoids contact attempts
Refuses to sign personal guarantee
Customer breaks terms of original agreement
Customer breaks their first promise
Customer only makes partial payments to buy more time.
Customer ignores demand letters

You have business to run. You have better things to do than spending your valuable time Collecting past due accounts. Handing your outstanding debts and accounts receivables over to a commercial collection agency is often your best course of action.

Debt Collection Laws – What You Should Know

With millions of Americans in debt, debt collection has become a booming industry. In 2004 alone, the debt collection industry made over $16.5 billion in profit. With so much money on the line, debt collection agencies are under a lot of pressure…

With millions of Americans in debt, debt collection has become a booming industry. In 2004 alone, the debt collection industry made over $16.5 billion in profit. With so much money on the line, debt collection agencies are under a lot of pressure. In some cases, this pressure has resulted in abusive and often aggressive behavior leaving many debtors feeling intimidated

In order to protect debtors from this type of aggressive behavior, the United States Congress passed several debt collection laws to help keep debt collectors and debt collection agencies in check. The debt collection laws make sure that the growth of the debt collection agency is coupled with the values of good service and integrity.

The primary debt collection law is the Fair Debt Collection Practices Act (FDCPA) of 1977. FDCPA specifies the best practices in which debt collectors must conduct themselves, placing measures prohibiting debt collectors from engaging in certain activities. Some of these measures include the following:

  • Violations of your privacy – Debt collectors can only talk to other people for the purpose of finding your current location. They are not allowed to disclose any information regarding an outstanding or the terms of the debt collection process.
  • Unfair calls or visits – According to debt collection laws, especially the FDCPA, debt collectors are not allowed to appear at your doorstep whenever they want to. They are only allowed to call or visit between the hours of 8:00 am and 9:00 pm. Debt collectors are also prohibited from appearing at your workplace, especially if you have previously informed them that you are against such visits.
  • False Representation – The debt collector cannot intimidate you with false authority; they cannot say that they are a lawyer or lawfirm if they are not. The debt collector cannot inform you that they have the power to personally repossess your things. They also cannot present documents that give the appearance their actions are directed by the US or State Governments.

However, the FDCPA is not the only law that is related to debt collection. Individual states usually have their own debt collection laws that are imposed to provide protection for their residents. For example: in California, debt collection laws require the debtor to keep written records of communications and transactions with the debt collector.

On the other hand, in Pennsylvania the Fair Credit Extension Uniformity Act was passed helping protect debtors from the deceptive behaviors of debt collectors. This act supports the FDCPA and it states that debt collectors CANNOT falsely imply that your inability to pay your debt is a crime. The debt collection laws of Pennsylvania also detail that debt collectors are not allowed to issue false threats of legal action.

All of these debt collection laws at both the Federal and State levels, have one thing in common: they help protect debtors from being abused by eager debt collectors.

Do you have a question about the Fair Debt Collection Practices Act or debt collection laws in your state? Feel free to contact the Stevens-Lloyd Group, Inc today.

Understanding Fair Debt Collection

The words debt collection bring a lot of panic and anxiety to individuals who are in debt. It may be your student loans, your mortgage on your house or your car payments. No matter what the debt may be, debt collection is something…

The words debt collection bring a lot of panic and anxiety to individuals who are in debt. It may be your student loans, your mortgage on your house or your car payments. No matter what the debt may be, debt collection is something that every debtor has to face. After all, your creditors and lenders need to get their money back.

So when you answer your phone and you encounter the representative of a debt collection agency, don’t panic. Remember that debt collection is an activity that is regulated by the law. The law ensures that debt collection is just an act to pursue you to make payments; it will not impede on your rights. The Fair Debt Collection Practices Act of 1977 details the rights that you have when it comes to debt collection.

Understanding Debt Collection

If you owe a certain amount of debt to a company, you usually pay the debt according to the contract that you signed. However, if you miss payments or you refuse to stick to the payment plan, the company may turn the debt over to a collection agency– this can also happen if you continually ignore notices from your lender. Simply put, debt collection happens when your creditor or lender feels that pursuing you for payments is already taking up too much of their resources.

Of course, the debt collector cannot simply pop up on your doorstep, demanding that you pay your debt. Typically, debt collection starts when a collector contacts you and notifies you of the status of your debt. The initial contact can happen through a lot of ways. It can be done through a letter, a fax, an email, or a typical phone call. In some cases, the debt collection process can start with a home visit from the collector. However, do not panic. The first visit is usually for the purpose of gathering information only. The debt collector simply wants you to know that he will be handling your payments.

Debt collection is a very transparent process. You will be given all the information you need. For instance, within five days of initial contact, the collector will send you a written document that will provide the necessary details regarding your debt. It will include the name of the creditor or the business from which you borrowed the money. Also included is the specific amount that you have yet to pay.

However, it is important to note that debt collection activities are not always 100% accurate. Sometimes, businesses may fail to update their records assuming that you have missed some payments. If you believe that you have sufficiently settled your debt, you can just write a letter to the collector to explain yourself. You must show proof that you have settled the account, and until the collector can dispute your claim, all debt collection activities will stop.

Do you have questions regarding debt collection?

Call the Stevens-Lloyd Group today.

The Importance of Understanding the Debt Collection Statute of Limitations

Debt collection is covered by the statute of limitations. The statute of limitations refers to the law that sets a deadline for law suits. For every type of case, the law sets the timeframe in which debt collection agencies can legally attempt to collect…

Debt collection is covered by the statute of limitations. The statute of limitations refers to the law that sets a deadline for law suits. For every type of case, the law sets the timeframe in which debt collection agencies can legally attempt to collect on that debt , including filing lawsuits against the debtor.

Normally, the debt collection statute of limitations begins to run the date the contract is “breached” “or broken.” In reference to debt collection, after the designated statute of limitation expires, a debt collector can no longer collect on the debt. So it is imperative you hand the debt over to a collection agency to begin the process before the debt collection statute of limitations expires.

The debt collection statute of limitations is computed according to the last time your client made a payment to the outstanding debt. In most states, 180 days(Six months) will be added to the date the last payment was received. From that point, the debt collector will then add the number of years of the statute of limitations according two things: the state where the debt was incurred and the type of agreement that was entered into for said debt

For example: let’s assume the debt was an open-ended account in Tucson, AZ. The last payment received was May 15, 2016. 180 days is added to the date bring the date to November 11, 2016. From that point, six years will be added to the November 11, 2016 date. Making the date that the debt collection statute of limitations expires November 11, 2022. All debt collection activities must cease upon that date since the debt collector can no longer use legal action to force the debtor to pay.

This is why Knowing the debt collection statute of limitations in your area is so very important. With this information, you can know the situation of your account and how it affects the chances of you being able to recover your outstanding receivables and/or debts

To determine the statute of limitations on your debt, it is important to know what kind of debt you have.

Open-Ended Accounts – According to the Truth in Lending Act, an open ended account is a type of credit plan that has repeated transactions and interests and balances that vary from time to time. Credit cards belong to this classification.

Oral Contract – This is a contract where you verbally guarantee someone that you will pay the debt you owe him

Written Contract – A debt where the creditor and debtor sign an agreement that details the terms of payment as well as fines and penalties

Promissory Note – This involves a written document where the debtor agrees to pay the debt according to a specific schedule of payments. The debtor also agrees on the applicable interest rates.

Remember, even if the account is only a month (or a even day) away from the expiration of the statute of limitations, you can reset the the six months and six years statute timeframe expiration date if your client/customer pays just a single dollar towards the outstanding debt resetting the six months and six years statute timeframe for any possible law suits.

For a complete lis of the Debt Collection Statute of Limitations by state visit:
https://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-1.aspx

Commercial Collection Agency – 5 Things to Consider When Hiring One

While there definitely are ways to avoid using a commercial collection agency, sometimes you have no choice. Running your business is what you excel at, after all, and dealing with recovering outstanding debts and delinquent accounts can consume your patience, time and resources. Calling in the professionals…

While there definitely are ways to avoid using a commercial collection agency, sometimes you have no choice. Running your business is what you excel at, after all, and dealing with recovering outstanding debts and delinquent accounts can consume your patience, time and resources. Calling in the professionals is often the best choice.

When looking for a commercial collection agency, it͛s important to remember that not all agencies are created equal, nor are they the right choice for your particular business. Here are 5 things to consider when choosing a commercial collection agency to partner with.

Commercial Collection Agency – 5 Things to Consider

Research. Commercial Collection Agencies will often specialize in particular fields. For example, one commercial collection agency might specialize in working with small and home-based businesses, while another made specialize in securing funds for large corporations. When possible, be sure to determine what size businesses the agency works with and what type of debtors they will go after

Insurance. No matter the level of research you do, you always run the risk of working with a commercial collections agency that uses ͞aggressive͟ debt collection tactics or leaves the debtor with the impressionthat the agency has acted in bad faith, leaving the debtor with the option to sue. No matter the outcome of the suit, whether you win or lose, you want to ensure that you will not be held liable for the actions of the agency. Always retain proof of insurance, otherwise know as ͞Error and Omission͟ ( or E and O͛s), from commercial collections agony you choose in the unlikely event both of you are taken to court by the debtor. Any good and reputable Commercial Collection Agency will be able to provide it for you.

Validity. Different rules apply for different commercial collection agencies in every state and locale. It is imperative that you verify that the agency you want to work with is licensed, bonded and adheres to the rules laid down in the Fair Debt Collections Act

Click Here to see our previous article entitled Understanding the Fair Debt Collections Act.

Debtor Recovery. Good commercial collections agencies will have at their disposal the ability to perform ͞Skip Tracing.͟ Otherwise known as debtor and fugitive recovery, Skip Tracing allows a commercialcollection agency to access several databases that provide them the ability to late a debtor who has ͞skipped town͟ and left no forwarding address; an important tactic to deploy should you find yourself unable to contact a debtor or have been repeatedly ignored.

Fees and Costs. Once you͛ve done your research and found a commercial collection agency that you would like to work with, you need to consider the costs associated with their services. Collection agencies can vary when it comes to charging for their services and it is important for you to choose the one that is right for you and your business. Two common payment structures are contingency and flat fee.

  • Contingency: This payment arrangement type os typically what you will find. Most commercial collection agencies use a no collection no fee model and charge anywhere from 25-45% of the total amount of the debt. This amount is usually determined by the age of the debt and the amount of attempted contacts with the debtor that have been made.
  • Flat Fee: A fairly small flat cost associated with a type of ͞Pre-collection͟ fees. This type of fee is usually offered early on in the debt collecting process.

It is important to keep in mind that once you hire a commercial collection agency, you won;t be receiving the full amount of the total outstanding debt. Consider exhausting all your options before hiring a debt collection agency.

Check out our previous article How to Avoid Using a Collection Agency for more information.

With that being said, as we mentioned at the start of this article, dealing with recovering outstanding debts and delinquent accounts can and will consume your patience, time and resources. Instead of allowing those accounts get away with not paying, calling in a professional commercial collection agency is often the best choice.

How to Avoid Using a Commercial Collection Agency

5 things that you can do to encourage customers to pay on time.
It doesn͛t matter what type of business you own, odds are you will one day face the problems associated with delinquent payers and debt collection. Sometimes it will be a case of oversight on the customer͛s part, other times it will…

5 things that you can do to encourage customers to pay on time

It doesn’t matter what type of business you own, odds are you will one day face the problems associated with delinquent payers and debt collection. Sometimes it will be a case of oversight on the customer’s part, other times it will be due to willfully and actively avoiding their payment.

Although there are plenty of tips and strategies for proceeding with debt collection, below are five steps you can take to encourage your clients or customers to pay on time and avoid using a commercial Collection Agency

How to Avoid Using a Commercial Collection Agency

1. Credit Check – Although credit checks can be expensive and sometimes time-consuming, nothing could be more important when it comes to avoiding the hassle of a delinquent customer or client–especially in the case of a significant debt. Small transactions are rather pointless for you to run a credit check, they simply aren’t worth the expense or the time invested. However, if the agreement you are entering into is creating a long-term relationship and/or is a considerable amount of revenue that could impact your bottom line, run a credit check. Although not a guarantee of payment, running a credit check can help you avoid using a commercial collection agency to track down those problem clients and delinquent accounts in the future.

2. Checking References. Although readily asked for when applying for a job or renting an apartment, reference checks are often overlooked as a reliable means of determining the risk of a customer or client. Contact their past business partners/relationships to see whether or not their experiences with the risk were positive and whether or not they paid on time. Although it may seem counter-intuitive, invite them to do the same with you.

3. Put it in writing. Putting the terms of your payment arrangement in wiring, including due dates and the amounts owed, is a must. By clearly communicating your terms in writing and having your clients/customers agree to those terms, you ensure your risk against delinquent accounts and help avoid using a commercial collection agency.

4. Accept credit cards. Though not a perfect fit for every business type or transaction, they can be very helpful when a customer/client owes you a large sum of money. By accepting payment via credit card, you shift the burden of debt collection onto a third party, namely the credit card company. The small fee you will pay per transaction is a small price to pay compared to hiring an attorney or commercial collection agency. By accepting credit cards, you can focus on what you’re good at, running your business, and let MasterCard and Visa deal with the collections.

5. Make contact. One of the easiest ways to avoid using a commercial collection agency is to simply make polite and cordial contact with the debtor. It’s entirely possible the customer/client simply overlooked their payment. In this case, a friendly reminder phone call will often do the trick.

A simple phone call, email, or letter on your company’s letterhead notifying them of their late payment simply stating something along the lines of ͞Have you overlooked this?͟ is often times the very best way to begin the collection process.

The fact remains, no matter the steps you take, no matter how diligent you are or the care you take in assessing the risk, you will end up with a delinquent account. However, by following the items outlined above you can reduce your future problems dealing with debt collection and avoid using a commercial collection agency.

The above article contains general legal information and does not offer any legal advice. The law is complex, varies from state to state, and changes often. When it comes to legal advice always contact a licensed lawyer.

Credit Management Services: 5 more Tips for Successful Receivables Recovery

In out first installment of our Credit Management Services series and successful recovery of outstanding receivables, we covered tips from documenting everything to payment plans and finance charges. In our second article, we discussed the importance of making …

In out first installment of our Credit Management Services series and successful recovery of outstanding receivables, we covered tips from documenting everything to payment plans and finance charges. In our second article, we discussed the importance of making copies, providing demand letters and personal guarantees when attempting to recover your delinquent accounts receivables.

In part three of our Credit Management Services series, we continue with Collection Manger Joy Paul͛s tips for successful recovery of outstanding receivables.

Credit Management Services

Tip #13 – Timing Is Everything

Credit Management Services | International Debt collector

Debts are not like fine wine, they don͛t get better with age! Remember that timing is everything. Debts become less collectible the older they get. The more time elapses, the more opportunity there is for the debtor to file bankruptcy or liquidate their assets and get out from paying their bills entirely

Businesses tend to hold on to their delinquents an average of nine to ten months, six months longer than they should. There is a systematic approach to recovery of outstanding receivables. This requires resolution of these accounts within 90 days and subsequent follow up if the debt is still not paid

After an account is ninety days past due, send a 10-Day Demand Letter. It is imperative to place a call to the debtor on the tenth day. Inquire if they received the 10-Day Demand Letter. State that if they don͛t pay, they will be sent to collections.

If the account is over 120 days and there is little to no movement towards money, it is time to deploy a collection agency or initiate legal action. The last statement or demand letter made to the debtor has to specify exactly what you will do and when you will do it. Holding on to accounts too long causes added internal costs. Time spent working on fresher account is far more productive than hacking away on older ones!

Tip #14 – Hiring Collection Agencies – Don͛t Spend A Dollar Chasing A Nickel

Most businesses wait twice as long as they should before turning accounts over for outside collections. For every 30 days, your chances of collecting in-house drop another 12%

Collecting debt is basically a financial process. We treat it as an ͞emotional͟ process because we͛re human. But it͛s the financial process that determines whether we make or lose money for our company.

Accounts up to four months old are 80% collectible. Files 4-12 months old are about 20% collectible. Because the older accounts are obviously less collectible than the new ones, and because you don’t have enough time to work on them all with equal effort, you have to focus on the most recent ones and give up on some of the older accounts

When the debtor is communicating with you, do not place an account with a collection agency. Only assign accounts to a collection agency when the debtors completely ignore demands for payment and do not return calls, refuse to pay, when they lie, or when there are numerous broken promises or an NSF check. Another reason to retain a collection agency is if there is an irreconcilable dispute.

According to Joy, collections agencies can also offer suggestions and act as sounding boards. For instance, The Stevens-Lloyd Group suggested on one problem account to hire an private investigator to locate assets. This advice actually paid off and Joy was able to recover the money through legal means

A collection agency can offer advice and encouragement. After all of the steps required to file a small claims case have been implemented, a collection agency can take over once a judgment is procured. This is advantageous because attorneys can be expensive and collection agencies work on a strictly contingency basis.

If a case is large enough to render an attorney cost-effective, a good collection agency, such as The Stevens-Lloyd Group, knows who the good attorneys are. They have the knowledge and experience to cull out expensive and mediocre attorneys.

There is definitely something to be said about getting a problem account off of your shoulders!

Tip #15 – Be Proactive With Legal

In some situations, legal action is necessary. In her business, Joy has come across debtors who received the insurance check but deny receiving it, therefore not paying TM Building Damage Restoration for the work they performed. Other situations may be debtors refusing to pay, never returning phone calls or responding to emails, or sending a check with a partial payment and marking it, “paid in full.”

In handling unpaid accounts, Joy realized that there comes a time when you have to quit working on an account and proceed with legal action. One option is a Small-Claims Court. Anyone can file suit in a Small-Claims Court, without representation by an attorney.

The chief advantage of filing in small claims is the low cost. In some cases, less than $200 covers the entire cost of filing a claim and having papers served on the defendant.

You can also hire an attorney to file suit on an account in civil court. But a far less expensive use of an attorney is to hire one to send dunning letters to your debtors on the attorney͛s stationery. The advantage of the letter is that it͛s not only relatively inexpensive, but, more importantly, a letter from an attorney, unlike regular bills from you, tends to get opened. Debtors realize that to ignore a legal-looking notice could result in a fine, repossession of physical assets, or worse.

Tip #16 – Going To Court

In a class she attended entitled ͞Collection Law 2013͟, Joy studied the key aspects of collection law. Attending this class plus going through the actual process and applying what she learned has helped Joy to be the success she is. This, combined with the expertise of The Stevens-Lloyd Group, Inc. have proved invaluable in Joy͛s pursuit of excellence

Joy won 5 out 6 small claims and one civil case. She handled 6 small claims cases, won them all and recovered them all. Get all of the court forms in triplicate. Joy reminds us that you must notify the debtor when taking them to small claims court. Joy recommends small claims court for cases $1,000 and over. The small claims office in Tucson, like many small claims courts throughout the country, is very helpful and costs can run $200 – $500.

Accounts owed for over $2,500 is considered a civil court case. However it must to be under $10,000. Be mindful of statute of limitations, 290 days in civil court to get it in the court. Joy learned that she can file $10,000 civil cases without having to hire an attorney

Through her experience filing small claims and justice claim lawsuits, Joy discovered the value of deploying Constables. They may cost a little more money, but Constables are much more effective than regular process servers in serving documents to debtors. Costs are $78 to file and $78-$140 to hire a constable. A constable is a sheriff and is highly recommended and critical. He or she wears a badge, which proves to be very intimidating plus effective when it comes to serving debtors. He or she will attempt service three times. The more information you can give the constable the better. The constable can also help you locate the debtor

You must notify a debtor if you win the case. You can collect all of the fees and court costs incurred from the debtor, but judges can be temperamental regarding the collection interest.

And lastly, keep in mind that the legal process is very intensive, all paperwork has to be properly filed and on time!.

Tip #17 – Locating Assets Once Judgement Is Rendered

Private Investigators can be hired for $75. For instance, a PI will check the debtor͛s utility bill to locate where they live. They will also conduct a comprehensive asset and liability investigation on the debtor, as well as extensive skip tracing. For large amount owed, this is the recommended step in order to locate the debtor and their assets.