Collecting Judgements
Business owners typically choose to pursue delinquent debt by suing the organization that is indebted, using the court to remedy the situation by seeking to be awarded a judgment. This is often looked at as the first step in the collection of past due business debts, though what many business owners do not realize is that, because most courts do not enforce the judgment and repayment, the court ruling means little.
With the judgment awarded and the difference between right and wrong determined, the court often sees its purpose fulfilled. They’re more concerned with what should be remedied rather than enforcing what will be remedied, simply because the resources required to pursue payment from an indebted party, or even to monitor the activity ensuing after a judgment award, is too much of a drain on the courts in terms of money and time. Because they do not want the costly burden, business owners are left to their own resources.
With judgment in hand and a lack of assistance in enforcement by the courts, the next resource to collect on the judgment is often a commercial debt collection agency. The logical result in the minds of many business owners is that, with the weight and credibility of a court-awarded judgment, a collection agency can easily recover the indebted total.
There are, however, numerous flaws in this logic. First, when a business takes a non-paying debtor to court in search of a judgment award, the business relationship between the two parties has significantly deteriorated, hardening the debtor against repayment. A Commercial debt collection agency is rarely interested in taking on these pursuits, knowing that the individual owing money isn’t going to be inclined to pay at all once he finds out the court isn’t willing to enforce the judgment.
One way to secure a greater chance of collecting the unpaid debt is to contact a commercial debt collection agency BEFORE seeking a judgment award, rather than after. An agency should be the first optionnot the last.
Most commercial collection agencies work on a contingency-only basis. This means they get paid if, and only if, they successfully collect your past due debt. Obviously, this gives them great incentive to successfully resolve your past due debt. Commercial collection agencies also tend to charge the least in contingency fees, typically around 30%, or even less.
Consumer debt is not the same as commercial debt, so business debt collection agencies are privy to a completely different array of tools and resources to help recover delinquent debt. Using asset and private investigation, for example, can yield a better outcome than contact via demand letters and frequent phone calls. This allows for rectifying delinquent accounts much more quickly and efficiently.
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Tactics A Debt Collector Uses And What To Do After You Have Paid: Debt Collection Basics Part Four
In the first three parts of this series I wrote about collections accounts, described how sending unpaid accounts out to an agency helps out a creditor, and described the practice of selling an old debt to a third party collection agency. I spoke about the type of information that a collection company will obtain to utilize in their efforts, and the type of laws that third party collection agencies must follow. I described illegal and legal tactics that debt collection agencies use to collect.
I let you know that most bill collectors know that it is crucial to collect on your accounts as soon as possible. A number will ask you why you can’t pay today, and a few might attempt to manipulate your emotions or insinuate that you are fiscally irresponsible to upset you into agreeing on a payment.
Another strong arm tactic used in the industry is to upset a debtor by manipulating their emotions, and then transfer them to an agency supervisor. By this time the debtor might be angry or frustrated and it will be more probable that they would agree to something easier simply to get off the phone. If you find yourself in this situation, try to remain calm throughout the conversation.
Try to remember that you aren’t talking about a mortgage payment; the debt collector can not take your house away if you can not make the payments that they are specifically requesting. Don’t let the collection agency manipulate you into agreeing to something that you cannot afford at the moment or intimidate you into doing what you don’t want to do.
Do your best to remain firm and stick to the terms that both parties agreed on. After working out a payment plan, as with ANY financial decision, verify your agreement in writing by mailing a plan in writing by certified mail, return receipt requested to prove delivery and make sure that the agency received it.
Rapid Recovery Solution does commercial debt collections and writes articles on medical collection companies. This article, Tactics A Debt Collector Uses And What To Do After You Have Paid: Debt Collection Basics Part Four is released under a creative commons attribution licence.