- Be professional at all
times
The worst way to go about
collecting a debt is to start making threats or
using aggressive language. In the first couple
of contacts, keep the tone friendly - there may
have been a misunderstanding or circumstances
that have prevented a partner/client who is
traditionally a prompt payer from settling the
account. To begin with, give them the benefit of
the doubt. If, after a few communications, you
still have not received payment, remove the
friendly tone, but remain professional. Do not
ask for payment any more, but demand it. Do not
threaten legal action unless you fully intend on
carrying it out.
Persistence
If
a client says the payment will be made by
Wednesday, follow them up on a Wednesday
evening. By doing so, it lets them know that you
can not be put off easily. This is especially
important if the debt is held by an overseas
client. If they do not respond to mails, call
them. In some instances the annoyance you will
cause them will help create an incentive to
speed payment.
Personal
visits
Some people are quite
happy to ignore the sternest of mails, but turn
to jelly where there is a threat of a face to
face confrontation. Try organizing with the
debtor to have your debt collection specialist
visit them personally if this is possible. They
may suddenly pull out their checkbook without
you even needing to step outside your door. If
you do decide to send your debt collection
specialist, instruct them to go either through
an arranged visit or unannounced, and ensure
that the specialist remains professional at all
times while on the premises. It is a good idea
to the debt collection specialist to take
someone along as a witness.
Offer
alternate terms of payment
If it
appears that a client is struggling, but does
not want to admit it, try offering terms - but
do not make the terms so generous that it will
cause you economic difficulty. Also, it is wise
to cease further work for this client while the
debt is being paid off.
When
nothing works.
If you have tried
everything and you still have not been able to
collect the debt, a call to your lawyer is
worthwhile, or to a debt collection agency.
Sometimes if a debtor sees that a third party
has been brought in, it will cause to them to
become more flexible and more willing to settle
the account.
About
legal action
Many people
threaten each other with legal action over a
debt. First, your lawyer will need to provide
the debtor with a letter of demand formally
suggesting the possibility of legal action. If
the debt is it still not paid and the matter
goes to court, you will need to prove to a court
that the debt is authentic. If the claim is
proved, you will receive a judgment. After
thirty (30) days, and no appeal is filed, then
your lawyer can begin to search for and seize
the debtor’s assets. As the old saying goes, an
ounce of prevention is worth a pound of cure.
Take steps to minimize your bad debt by paying
attention to your accounts payable and not
continuing to work on accounts that are
seriously past due..
What is
Debt Collection Practices Act
(FDCPA)?
The federal Fair Debt
Collection Practices Act (FDCPA) sets the
national standard for collection agencies. The
FDCPA, enforced by the Federal Trade Commission
(FTC), prohibits abusive collection tactics by
debt collectors and prohibits unfair debt
collection practices; such as, lying to,
harassing, misleading, and otherwise abusing
debtors, or invading their privacy. If a
collection agency violates the law, debtors can
contact the Federal Trade Commission for help.
Generally, the FDCPA only applies to agencies
that collect debts for others. The law does not
apply to creditors collecting their own debts.
However, other federal or state laws may apply
to in-house debt
collections. |
