Three Ways to Collect an Outstanding Debt

Author: Christine Harrell

No matter what measures you take to try and weed out potential non-paying customers, sooner or later one or more accounts are likely to become past due. When you find yourself with a past due account on your hands, the worst thing you can do is ignore the problem. The more time that passes between the payment due date and the time that the customer is contacted, the less likely you are to receive the full payment. After 6 months, you statistically collect only 50% of the amount due and after a year that amount drops to only 25% of the original debt. If you're serious about making a profit, there are three ways to handle collection on past debt; in house efforts, hiring a collection agency, or taking legal action.

Collecting the debt yourself:
If the debt is new or small, you'll probably start by trying to collect the debt yourself before hiring a collection agency or a lawyer. The most effective way to start the process of collecting an outstanding debt is by calling the debtor. Be firm, yet polite when you call. Make sure to keep records of the time, date, and resolution of the phone call. You'll want this information later should you decide to hire a collection agency or a lawyer.

Many nonpaying customers can talk a great talk on the phone, but then never deliver. If you get the "I have the check right here and will send it in the mail" line from a business customer more than once, tell them you'll send a courier service or someone from your office over to pick it up. If the business is local, try making an appointment with their finance manager to talk face to face.

Another effective way to motivate customers to make a payment is with a 10 day demand letter. Some collection agencies offer a free 10 day demand letter service that includes postage and mailing of a demand letter sent on official collection agency letterhead. Many times, this is enough to get your customer to part with their payment.

Hire a Collection Agency:
Many small businesses don't initially think of hiring a collection agency to collect an unpaid debt, but of the outsourced solutions, a collection agency is usually the most cost effective and gets the best results. When you consider the in-house time spent trying to keep on top of delinquent customers, a collection agency is often more cost effective than trying to handle it with your own staff.

With a collection agency, you don't pay until they collect the debt, meaning that the collection agency is highly motivated to find a way to get the customer to pay. Because they don't get paid unless you do, a collection agency tends to work fast, delete = "work at odd hours", and use all of it's professional resources to locate missing debtors.

Today's collection agencies don't use scare tactics or bully customers. That type of behavior is outdated and crosses the lines of legality. Besides, not all customers who are behind on payments are deadbeats. It's never wise in business to make enemies and gain a reputation as a brute force knee breaker for any customer who has a tough month. When you choose a collection agency, make sure one of its goals is to maintain extreme professionalism.

Taking legal action:
Another option to collecting a debt is to take legal action whether by taking the debtor to small claims court or by hiring a lawyer to pursue the debtor.

Article Source: http://www.articlesbase.com/finance-articles/three-ways-to-collect-an-outstanding-debt-65268.html

About the Author
The author is a freelance copywriter. For more information about what a collection agency can do for you, visit www.AABUSA.com.

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How to Deal With Debt Collectors to Save Yourself From Stress

Author: April Kerr

Dealing with debt can be amongst the most stressful things to deal with in life. The thought of debt collectors pounding at your door and phoning day and night is incredible intimidating and can make you feel ill with fear and worry. Thankfully you can protect yourself from debt collectors and there are laws in place so that you don't feel intimidated.

The Fair Debt Collection Practices says that debt collectors can't phone before 8am or after 9pm, they can't take your wages or harass you with non-stop phone calls.

Due to these practices you have a number of options. First and foremost, you don't actually have to take any debt collection calls. You can choose to use your answering machine to screen calls before you answer the phone. There are even call-blocking services for filtering them out completely.

If you do decide to pick up the phone simply and politely ask them not to call again. Legally they have to conform to your wishes if you send a 'cease and desist' letter. Legal action costs a lot of money so should be avoided if you can. There are other ways you can deal with them too.

At the end of the day, if you took out a debt then you should make arrangements to pay them. This may sound difficult if you are struggling with money however it's possible to negotiate a lower rate.

By keeping up with your re-payments the phone calls will end. Debt collectors are people too and are just doing their job. Once and agreement has been set up and you stick to it, they will simply leave you alone and target other debtors.

Start a diary and take notes of calls made and received along with the content of the conversation. If you decide to record the calls, make sure to tell the advisor what you are doing.

When debt collectors know the call is being recorded, more often than not they'll be on their "best behaviour." A diary or recording can become very important if you have negotiated a better deal on the debt.

It may not be apparent to you but most debt collection agencies can reduce the amount you owe. Because they receive a percentage of the collected amount, they may think it's worthwhile to have 50% of $700 than %100 of nothing.

When you make an agreement about payment, you should ensure that the collection agency doesn't add more black marks against your credit report. You should also be firm about them reporting quickly about payments you make and adjust the total amount due.

Make sure that all agreements are down in writing before sending large amounts of money. Send a small amount to show that you are committed to paying the debt however if you send too much they may not bother binding to your agreement.

Stay calm and patient throughout your conversations because you don't want to get on the wrong side of them and make matters worse.

Article Source: http://www.articlesbase.com/personal-finance-articles/how-to-deal-with-debt-collectors-to-save-yourself-from-stress-314446.html

About the Author

April often writes articles for the Daily Dosh blog which also has articles relating to credit reports and debt councelors.

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For some people it’s been a rough couple of years. Our financial system is in the middle of a long-needed correction but it hasn’t been easy for many people. If you’re in that boat with the rest of us you know what I’m talking about.

You may owe more than you can pay and as a result, you may have been contacted by one, two, or more bill collectors. That’s never a pleasant experience especially if they call you several times a day, leave messages, and send letters, etc. It’s especially unpleasant when you’re being contacted by a bad debt collector, someone who attempts to get you to pay by bullying you.

Unfortunately, a significant number of collection agencies employ this tactic and often get away with it. And if you’ve summoned up the courage to actually speak to a collection agency representative to try and work out your problem only to be treated in an abusive manner, it’s very disheartening. But under the umbrella of the Fair Debt Collection Practices Act or FDCPA, there are ways for you to counteract that kind of treatment.

You can file a formal complaint with the Federal Trade Commission (FTC) against the collection agency. The FTC’s job is to enforce the FDCPA and their website has a form just for consumer complaints of this type. Understand that a single complaint won’t cause any collection agency to shake in their boots, but if you copy them in on the complaint you’ll be announcing to them that you know at least a little bit about your rights and that may get them to back off of their hard-handed tactics.

You can file a formal complaint with your State Attorney General or the Attorney General of the collection agency’s state (if they’re based outside of your own). On a state level, the Attorney General is usually charged with enforcing a state’s collection laws so a letter to his or her office pointing out the specific abusive behavior you experienced is probably the right place to go. Again, copy in the collector so they know you’re an advocate for your own rights and won’t be pushed around.

Remember that complaining about a bad debt collector or even suing one yourself does not in any way erase your obligation to pay back a just debt. But no matter how much money you do owe or how long you’ve owed it does not entitle any collector to treat you unfairly.

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A debt collector refers to an individual or agency that pursues payments on debts owed by individuals or businesses. In the case of a collection agency, it operates as an agent of the creditor. The collection agencies collect the debts at a percentage of the total money owed.

We also have agencies that are referred to as ‘debt buyers’. These agencies purchase debts from creditors for a fraction of the value of the debt. They then pursue the debtor to recover the full amount owed.  Creditors normally hire collection agencies so that they can remove the owed debts from their accounts receivable. The creditors then write off as a loss the difference between the amount collected and the actual amount of the debt.

A collection agency acts as a debt collector on behalf of the creditor. Countries that have collection agencies have laws that govern the agencies. The laws prohibit the agencies from any abusive practices. Some of the collection agencies are subsidiaries of the companies that own the original debt and for this reason they are referred to as ‘first party agencies’. They are part of the first party to the contract, that is, the creditors. The second party in this case refers to the debtor

First party agencies normally get involved early in the debt collection process so that they can help maintain a good customer relationship. Third party agencies are normally not part of the original contract. The creditor normally hires them as a debt collector on a contingency-fee basis. The agency in this case is entitled to a certain percentage of the debt that it manages to collect.

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Copyright (c) 2008 Stephen Lau

In the present financial climate, debt collection is commonplace and many people may have to deal with debt collectors due to delinquencies. To deal with creditors is an art.

If you are among one of them, you may think that debt collectors are inhuman: they may have harassed you relentlessly.

Nowadays, many individuals have become debt collectors simply because they need a job, because they want to help others, or, for some, because they have a strong need for control and power. Whatever, debt collectors get trained, but do not go to school to become debt collectors.

Remember, debt collectors are just human, like everyone else. They, too, may have problems paying their own bills.

Understanding the human side of a debt collector may help you deal with one successfully. You must understand that their work environment is always filled with negativity. They need to call you incessantly and relentlessly: they would like to see as many as possible their clients become current. Like most other types of work, they have their own daily, weekly, and monthly goals to meet too.

As a smart consumer, learn how to deal with a debt collector. Dealing with debt collection is less of a hassle if you have the know-how.

According to Sun Tsu's famous book "Art of War", "Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy, but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and yourself, you are certain in every battle to be in peril."

So know your debt collector (your imaginary "enemy") and know yourself, and you will resolve your financial problems successfully.

As a smart consumer, it is important to make your account current. It is to your own advantage if you do. Ignoring your debt or delinquency problem - what most consumers choose to do - will not make the problem go away. Make your account current through a plan (knowing yourself, such as how much payment you can afford, and what to do with your current emergency debt situation) and good communication with your debt collector (knowing your "enemy", such as making the debt collector help you resolve your financial problems).

Knowing yourself also implies adopting a positive and confident attitude before and when you make your initial contact with your debt collector. Remember, you are not a bad person just because you cannot pay your bills. When you put down your name on the dotted line to obtain a credit or loan, you probably did it with good intention. When you are having a financial problem, take care of yourself first and foremost. Do things that may lift up your spirit - things that do not require further straining your finances, such as going camping or fishing (but certainly not going on an expensive vacation).

Be open-minded; avoid being neither defensive nor aggressive when you contact your debt collector. Remember, he or she is human, just like you. An attitude is never a good communication skill, and will not get you anywhere.

Rest assured, your debt collector knows your name and address, your home and work phone numbers, the amount of loan, whether it is secured or unsecured, your payment history, your late payments, and your last payment date and amount. Your debt collector has everything in front of his or her computer when speaking to you. Therefore, you must have the same level of information, otherwise you might feel being intimidated while speaking to a debt collector. That is to say, you must also be as prepared as your debt collector to stay in the same level of information.

As a smart consumer, always request a copy of the payment history and a copy of your contract for the delinquent account (if you have not already done so), and have them mailed to you. This may not only buy you more time, but also show your intention to resolve the problem. To protect yourself, you must read your contract in its entirety and review your account payment history. If errors occur, use them to your advantage.

Review your state's laws regarding collections and the federal Fair Debt Collection Practices Act (FDCPA) to know your rights as a consumer. Know what a debt collector can and cannot do. If you do not wish your debt collector to call you at work, fax a request to that effect. A debt collector cannot disclose your debt information on a telephone answering machine without your prior permission, or by mailing you a postcard.

If you are knowledgeable of the law and your rights, your debt collector will know that he or she cannot intimidate you.

(Part Two will be on the communication with a debt collector.)

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