Increasing Intensity to achieve collection

1. Chapter 11
INCREASING INTENSITY TO ACHIEVE COLLECTION

2. Keeping a Payment Plan on Track
• Reminding your debtor to honor the deal
 Send statements to the debtor in advance of each payment due date.
 Place reminder telephone calls.
• Promising follow-up legal action: When and How
 Formally demand payment
Work to resolve disputes.
When appropriate, enter into a written repayment plan.
 Keep good notes and records of your communication with the debtor.

3. Maintaining Aggressive and Persistent
Communications
• Staying in communication with your debtor
 Striving for an approach to collections that’s both professional
and ethical can help you avoid a lot of trouble.
• Stepping carefully to avoid setting yourself up for a
lawsuit
 Assume that the debtor is keeping notes every bit as good as
yours, maybe better.
 If the debtor requests verification of a debt, provide it.
 Make sure that you provide accurate balances for debts.
 If you’re collecting a debt owed by a member of the military,
respect his rights under the Servicemember’s Civil relief act
(SRCA).

4. Obtaining and Depositing Postdated Checks
and Electronic Payments
• Procuring postdated checks
The purpose of postdated checks is to simplify the
c0llection process.
• Utilizing Electronic checks
Generated by to receive money from the debtor’s
checking account.
• Credit Card Payments

5. Enforcing Liens and Bonds
• Foreclosures
• Construction Projects

6. Reporting Debts to Credit Bureaus
Making One Final Demand

7. Chapter 12
LOCATING HARD-TO-FIND DEBTOR

8. • Using Public records and directories
Public records may be available through the government web sites
or through the old-fashioned means of going to the govt. office.
• Using Internet Resources
You can search free databases and access commercial services on a
subscription or fee-per-use basis right from the computer
• Using your Instincts: They’re better than you think
(Additional method of obtaining information)

9. Implementing a Plan of Action
• How to skip trace
Some people are harder to find than others. But you can benefit
from developing a strategy.
A basic strategy to find address information:
1. Call the debtor to verify his address
2. Check to see whether his mail is being returned.
3. Use free internet resources to assist in verifying an address
or locating assets.
4. Contact neighbors/third parties.
5. Determine whether there’s personal liability or not.

10. Considerations to Keep in your Plan
Two factors whether to skip trace a debtor:
• Are you likely to recover money?
• Does the debtor owe enough money to justify the cost and
time investment in skip tracing?
 Limit skip tracing where there’s no personal liability
 Even when there’s personal liability: Practical and legal
limitations of skip tracing
 Stay on the right side of the law

11. Chapter 13
BRINGING IN OUTSIDE COLLECTIONS PROFESSIONALS

12. How Outside Debt Collection Professionals
Can Help You
An entire industry exists to help you collect money that’s owed to
you. Debt collection firms operate around the world and offer an
array of services.
Debt collection services may propose to:
 Have their people work at your company
 Answer phone under your business name
 Process forms and paperwork to facilitate billing and collections, such
as completing and filing forms for payment from insurance companies.

13. Considering your options
Professional debt collectors come in two flavors:
• Collection Agencies
- typically handle all collection matters up to the point that a
case goes to court.
• Collection Law Firms
– typically pick up cases around the time they appear
destined to court.
 When choosing a collection agency, consider how its size and services correspond not
just to your immediate needs but also to the expected growth and future needs of your
firm.

14. Selecting a Professional
Characteristics of a good collection service:
 One-stop shopping
 Bricks, mortar and people
 Meaningful reporting
 Prompt communication
 Alerts
 Information on other claims
 Remittances on collections
 Good percentage of recovery
 Recommendations
 Trustworthiness
 Legal compliance

15. Determining what services you need for
yuor claim
Collection professionals offers some or all of the following
services:
 Pre-collect services
 Billing services
 Document and form filing
 Skip tracing
 Credit reporting
 Credit interchanges
 Credit repair

16. Deciding When (Or Whether) to Bring in the
Pros
 Far and away the biggest mistake credit executives make is to wait too
long before engaging collection professionals. The older the debt gets, the
more difficult it becomes to collect.
Factors that may affect your decision:
 Economic trends in the industry
 General economic conditions
 Competition in your industry
 Requirements of your auditors or banks
 Factoring companies or receivable insurance contracts

17. “Why is a Pro any more effective than my
own efforts?”
A professional’s procedures are similar to yours, but professionals also
benefit from specialized training and techniques developed within the
debt collection industry.
Collection professionals know what to say and when to say it. They use
their instinct, imagination and creativity within the rules they trained to
follow.
They are highly motivated and devote the necessary time to become
familiar with your files and your debtors and to figure out what
collection techniques will work the best for your cases.

18. Cost considerations: should you write-off
the debt instead of turning it over?
You may incur costs beyond collector’s fee in other
situations, like:
Bankruptcy
Liens
Defense of counterclaims

19. Providing information to your professional
 Name, address, phone, e-mail, fax, and contact person for both the debtor
and company
 Exact balanced owed. Separate accumulated interest from principal
balanced owed.
 Banking connections, if they’re different from what appears on the credit
application.
 Results of contacts (admission of the debt, promises to pay, disputes raised).
Also a copy of phone log.
 Any other information you believe will help your professional get a running
start, such as knowledge of businesses affiliated with the debtor, any branch
locations, alternate phone numbers.

20. Avoiding and Resolving Problems When
working with Collection Pros
In addition to cost and payment, when retaining a professional service, you should
address the following issues:
 Confidentiality
-keeping information confidential
 Professionalism
-standards of conduct service must meet when handling accounts and
contacting debtors
 Ethics
-service’s obligation not to engage in unethical activities when handling
accounts
 Communication
-service’s responsibility to keep you informed on the status of accounts and to
respond.

21. Get in writing: Entering into a contact for
services
The collection industry is highly competitive and you cam
expect competitive rates. A contingency fee agreement should
describe;
When and how amounts recovered are to be remitted
 Costs chargeable to you
How remittances will be paid
 Before you hire a collections professional, figure out what services you
actually need and what each service costs.

22. Establishing standards of ethics and
behavior with your collections pro
When you hire collection professional and include them on your collection
team, you assume responsibility for the professionals to be, indeed,
professional and ethical in their service.
Fair Debt Collection Practices Act is a consumer laws that arose from the
misconduct of a few irresponsible and abusive debt collectors.

23. Giving your professional an organized life
The more information you can provide to your debt collector, the
better. Ideally, your files are organized such that you can quickly duplicate
copies of all pertinent documents and provide them to your debt
collector.

24. Deciding when to cut and run: Terminating
the relationship
Sometimes, due to performance, legal, or ethical reasons, you should
break your relationship with a debt collector. Most of the time, the signs
are pretty clear:
 Debts aren’t being collected
 Reports aren’t being received
 Calls aren’t being returned

25. How to file complaints for poor service
If the relationship between you and your collections professional becomes so
strained that you want to file a formal complaint alleging unethical conduct,
missing money, lack of communication, or other problems, keep these points
in mind:
 If you claim was placed through a law list, the law list handles your
complaints.
 If your professional is a lawyer, you can file a grievance with the bar
association in the state where your professional is licensed to practice law.
 If you located your service provider through a professional organization
such as the Commercial Law League of America, that organization
typically has a process for receiving and resolving grievance against its
members.

26. Chapter 14
DEALING WITH BAD CHECKS AND OTHER ROUGH SPOTS

27. When you try to collect from your customers, stumbling blocks appear in your
path. These obstacles may include:
Bad Checks: Customers checks can cause calamities. You’ll inevitably
encounter situations where customer checks fail to clear the bank.
Out-of-business debtors: Your customer goes out of business and has no
apparent assets or other means to repay you.
Disappearing debtors: Some debtors disappear, and you discover how
capable you are at locating people who don’t want to be found.
Bankruptcy and receivership: Some debtors obtain court orders
commanding that you stop your collection efforts, or they file bankruptcy.
Countersuits: When you sue to enforce you collection claims, your debtor
files a countersuit.

28. Being Proactive: Creating system that help
you avoid problems with checks
You need to be proactive and practical when it comes to receiving payments
on accounts. To minimize problems:
Require certified or cashier’s checks from customers you anticipate having a
problem with or who are new and unfamiliar to you.
Monitor your incoming mail and quickly deposit checks you receive.
Put a customer who bounces checks on your list of folks you can no longer
trust and accept only cash, money orders, or cashier’s checks.
Establish goo communication with you bank.
Allow 14 or more days for a check to clear the system before you rely on
that check to be “good money” that’s available for your expenses.

29. Dealing with Problem Checks
Communicate with your customer immediately upon
receipts of a bounced check. Hang on the phone for 20
minutes if you have to or go knock on his door. Express in
no uncertain terms that the check has to be replaced with
real money within 24 hours or you’ll take further action.

30. Additional advice on specific types of check
problems.
1. Nonsufficient Funds (NSF) checks
Minimizing incidence and impact of NSF checks
 Deposit checks as soon as they arrive.
 Anticipate NSF checks.
 Know your customer.

31. Our state’s laws for nonsufficient funds checks

32. 2. Checks drawn on uncollected funds.
Uncollected funds occur when your customer has deposited a check,
possibly from one of its own customers, that fails to clear the bank, which results
in your check bouncing.
3. Stop-payment orders
When a customer stops payment on a check, you know that the
customer intended that the check be dishonored.
4. Checks from closed accounts
This will happen when a debtor issue a check that is from a closed
accounts. The returned check will typically be marked “Account closed” or
“Refer to maker.”

33. Figuring Out what to do when a Debtor
Relocates
 Attempting to collect across state lines.
When a debtor moves, use your best skip-tracing efforts to locate
him. Verifying an address, phone number, and even a new bank account or
placed of employment further the cause.
 Using a professional where your debtor is located.
Hiring a pro located in or near the debtor’s city can bring fruitful
results.

34. Being careful when pursuing your money
During your collection your personal ethics and patient are tested
because your customer have million of excuses why he or she didn’t pay
their debts. You can increase your success in collecting your accounts if you
anticipate common roadblocks when implementing collection policies and
procedures.
Some debtors file lawsuits and counterclaim actions against you as
a creditor when they sense that your collection in somewhat weak, to
avoid their own mistake, or simply to delay or avoid payment.

35. The most common reasons for a debtor’s lawsuit or
threat are:
 Perceived violations of collection laws such as the Fair Debt Collection
Practice Act or a state consumer protection law.
 The debtor’s claim that the creditor provided defective gods or services.
 Claims of broken promises of repair, replacement, or other failures
attributed to the creditor.
 Desperation by a debtor who is in so much financial trouble that he’ll
challenge an invoice’s validity or his obligation to pay on any basis he an
think of, no matter how weak or frivolous.
 Feelings of anger and frustration against a creditor.
 A breakdown communication between the debtor and creditor, triggering
fear or aggressive behavior on the part of the debtor.

36. When things look bleak: Situations that may
require write-off
You can pursue debts owed by your debtors up to a point. But
exactly where is that point? Maintaining an active collection effort against
uncollectible debtors distracts you from other activities, including the
collection of debts from collectible debtors and your other responsibilities.
Face up to writing off bad debt when you have determined it to be
uncollectible.

37.  Out-of-business customers
If the debtor is an entity such as corporation, limited liability company,
limited partnership, or similar entity separate from its owners, and it’s out of
business with no remaining assets, your decision whether to write-off the
debt turns largely on your ability to locate the owners or locate any remaining
asset.
What to look when deciding whether to pursue collection:
 Closed bank account
 No remaining collectible A/R
 No remaining inventory, fixtures, or equipment
 No vehicle
 No real state
 No remaining personal property
 No claims against insurance companies
 No pending lawsuits as a plaintiff

38.  Debtors who can’t be found
When an individual who is personally liable for what you’re owned
can’t be located, despite the best efforts of you and any professional you’ve
hired, decide a course of action based on these factors:
 The findings of an investigation by an exam.
 The findings of an investigation you conduct yourself, including
information fromcredit reports and Internet sources.
 Promises made by the individual for repayment of the debt.
 Potential of the debtor to accumulate assets or earn income.

39.  Customers in bankruptcy or receivership
When a debtor files bankruptcy, it’s common to close out a collection
file. Bankruptcy or liquidation, is often as a no-asset case, meaning that when
the petition is filed, the debtor’s attorney knows there will be no assets to
liquidate. At the end of the bankruptcy, no money is paid to the creditors.
Claims on a deceased debtor’s estate
When an individual person who owes you money dies, you should
follow up for collection. You do this by filling a proof of claims with the
person’s probate estate in the probate court of the country where debtor
resided.

40. THE END…..