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Sending someone to collections is a choice that has to be well thought out. Federal law controls how you may and cannot try to collect a debt and how you can use collection firms.
To send someone to collections is to work with a collection company to get your overdue debt from them. It is not sending a client or customer to collections if you are attempting to contact them directly via your standard lines of communication or if you have sent them many letters informing them that their account is past due.
When Ought Someone Be Sent To Collections?
Many professionals advise delaying sending someone to collections for 90 days after the due date on your invoice. Once the due date has passed, you may urge the nonpaying customer to make good on their obligation; but, at that time, you cannot transfer them to collections. Instead, there are numerous actions you might attempt to be compensated via.
Before sending someone to collections, do these actions
Consider performing the following throughout the 90 days between the time an invoice is due and the time you submit the customer to collections:
1. Call The Debtor First
A polite, brief phone call may both remind the customer of their debt and convey your intent to collect it. Use a kind but strong tone, avoid berating the customer and explain how they may settle their debt throughout the conversation.
2. Send Letters To Collect Debts
After calling a nonpaying customer, you may send them debt collection letters or go right on to this stage. In your first letter, you should remind the customer of their obligations in the same polite but forceful manner that you would over the phone. Later letters might outline your plans to file a lawsuit or send the customer to collections.
3. Send Your Invoice Again With The Late Fees Attached
Sending a new invoice with a higher late fee on it might prompt payment (or sometimes, informing a customer that you intend to submit such an invoice). In this case, you may skip sending the consumer to collections.
4. Make A Compromise.
It’s sometimes preferable to settle a disagreement with a payment that, although less than the initial obligation, ends the problem. Given the high cost of collecting, a settlement can net you more money.
5. Visit A Local Small Claims Court
If the foregoing steps have not resulted in payment and the amount you are owed is less than the state’s small claims limit, you may sue your client in small claims court. No legal representation is required in small claims court, and if your client doesn’t show up, you’ll be declared the winner even if there isn’t a jury.
What Not To Do When Dealing With Collectors
If the debtor decides to take legal action against you, breaking this law might strengthen their position and cast doubt on the reliability of both you and the collection agency.
Make sure that neither you nor your collection agency does any of the following throughout the collecting process:
1. Incessantly Contact The Debtor Via Phone
This won’t only happen if the debtor specifically wants to contact you or the collection agency outside of normal business hours.
2. Contact The Debtor’s Attorney Without Delay If You Know They Have One
If the debtor has hired an attorney, you and your collection agency are prohibited from contacting the debtor directly. If that’s the case, the debt collector’s attorney should be copied on any contact with the debtor.
3. Be Sure To Keep In Regular Contact With The Debtor’s Family
Under the FDCPA, you or the collection agency are only allowed one effort to locate the debtor via personal connections. Neither you nor your company may ever bring up the fact that the debtor owes you money.
4. I Failed To Verify The Financing
A validation notification must be sent to the debtor by the collection agency within five days after the agency’s initial contact with the debtor. Before you hire a collection firm, be sure they have experience writing debt validation letters.
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