Author Archives Marilyn Miller

Liens and Small Business Debt Collection in Maine

Posted by Marilyn Miller on March 19, 2018  /   Posted in Uncategorized

Liens are used to secure an interest in an asset. Liens can be an effective tool in debt collection, if used correctly.

A lien is a claim against asset of another that prohibits the asset from being sold or transferred until the debt is paid back. Powerful tool, right? Right!  However they do not work in every situation. It is important to know how to obtain a lien and how, and when to use it correctly.

There are many types of liens. If you have trouble sleeping, click here to learn all about the many types of liens that exist.

For small business debt collection, there are basically only three types of liens that apply: mechanic’s liens, judgment liens and UCC liens.

Mechanic’s liens are generally used by trade contractors when they are not paid for a service that improves a project. The contractor put the owner of the property on notice that there is a claim against them. For example, an electrician or painter who works as a subcontractor and is not paid may be able to lien the property in question with a mechanics lien. Not all services are eligible and laws vary from state to state, but generally there has to be an fixed improvement to the property in question and subsequent non-payment. Services of an architect or engineer might be eligible, whereas a home heating oil delivery would not be, as it does not make a fixed improvement to the property.

There are two things to remember about mechanic’s liens: 1) There is a limited time after you provide your service to file one. It varies by state, but generally if you are not paid in 30 days, check to see if your product/service is eligible. 2) Mechanics liens are generally only good for a year or so. If the debt is not repaid, you will have to take action to either foreclose the property or sue for a court judgment and place a judgment lien on the property.

Another important thing to consider, especially for those working with consumers, is the importance of a solid contract upfront that has the appropriate language to protect you. Many mechanic liens are defeated because the original contract for the work lacked specific language required. Ask your attorney to check your contract today and save yourself trouble later.

Judgment liens can only be used after you receive a court judgment in your favor. The first step in making sure you get a proper judgment. Once you have a judgment, there are ways to you can put a lien property or equipment. Once again, as with most things, the way to file a lien varies by state. You collection partner can assist you.

In the State of Maine, once you get a judgment,you can file a writ of execution against your customer. A Maine writ of execution is filed a the country level, and secures any property owned by your customer in that county. They cannot sell or refinance their home without your release. If they own property in more than one county, for example Cumberland and York, you would have to file the writ of execution in each county. There are specific laws governing how to inform the property owner of the lien, so research and follow the law.

A judgment lien may also be used to garnish wages, bank account or other personal property.  There are many regulations to follow and limitations on the amount you can attach. Also, you cannot attach certain types of income such as attach disability or alimony.

A UCC lien is a federal lien that is traditionally placed voluntarily (consensual) against an asset to secure a loan. For example, a business buys equipment from Bank A, and Bank A puts a lien against the equipment.  Some UCC liens must be specific, against a specific asset. Others, such as a large bank loan can be blanket liens against all assets. You can use a UCC lien against a business or an individual. After a judgment, you can file an involuntary (nonconsensual) UCC lien against an asset, if you know what/where it is.

You can search UCC liens by state. Here is a link to the UCC Maine search tool. It is a good idea to check this information before granting credit to a new customer.

Do you homework beforehand, and check to see which liens are ahead of you. It costs money to file a lien, and the last thing you want to do is waste your money attaching a lien to an asset that is already so encumbered that your lien becomes worthless.

Small Business Debt Collection: Big Customers are Not Always the Best Customers

Posted by Marilyn Miller on March 16, 2018  /   Posted in Uncategorized

Small business debt collection is especially burdensome. Business owners and their limited staff wear many hats. They do not have much time to focus on recovering bad debt.  Small business debt collection can also be controversial, and not everyone is up to the task. Small business owners are more likely to trust customers, who are often their neighbors. Trust is a great thing in business, but it does not mean that business owners should fail to protect themselves with a good customer contract.

Small business owners are particularly vulnerable when it comes to larger, national companies. They feel that a big business has the means to pay, and would not risk their reputation by not paying their bills. Sadly, nothing could be further from the truth.

The most visible example of a big business stiffing small companies belongs to the Trump Organization. Small business owner Juan Carlos Enriquez of the Paint Spot in Doral, Florida sued the Trump Organization over not receiving the final payment of his contract. He knew that taking on a Trump company would require a “big gun” law firm and apparently had the means to hire one. He was awarded the outstanding payment amount plus almost $300,000 in legal fees.

But receiving a court judgment does not guarantee a payment, and payment was delayed. The owner was able to put a lien on the property, the famous Trump National Doral Miami Golf Resort. Still no payment. More waiting and more legal fees, and a judge ordered an auction of the property. Wow! Having a key asset, a jewel in his crown at risk would certainly force payment, right? Wrong! Trump’s attorneys simply put money in escrow, which avoided a foreclosure sale, and are now considering an appeal.  As of this writing, the debt remains unpaid.

Now, I do not mean to pick on Mr. Trump (who may have a valid reason for not paying the debt and has, I am sure, paid many people and is obviously very successful). There are small business owners and entrepreneurs all over with stories of being stiffed by large companies or wealthy individuals. I know an  experienced millwright who has a very successful business doing incredible custom work. He is so good that his entire business is based on customer referrals. Nearly all of his customers are wealthy, and many are celebrities, household names. And some of them owe him large sums of money.

As another example, I was hired a few years ago by a small independent contractor to collect a bad debt of less than $ 1,500 from a national megabank. We got the bill paid, but not without jumping through hoop after hoop. The bank never disputed the bill, and in fact admitted the work was done. They just took time paying it, and made it very difficult. It almost seemed as if there was a concerted effort to see if we would put in the effort to get paid, or just let it go.

Right here in Maine, I have been asked to collect several debts for small subcontractors who were hired by national companies. These national “service” companies win contracts with countrywide businesses and hire local contractors to do the work. Local contractors do not obtain contracts with the firms, which are essentially paper companies with few assets or no employees. The national service company has sold the account by quoting a very cheap price – a price they do not disclose to the local contractors. So, unless the local contractor confirms their price in a contract beforehand, they run the risk of either not getting paid or getting paid less than they invoice. I am currently working to recover two such debts: one for a landscaper and another for a local commercial cleaning company.

So big is not always better. A contract is always a good idea. Even a simple email confirming price and payment terms will suffice. Good credit practices – including your customer contract – must be your norm, whether your client is big or small.

A contract will make small business debt collection much more successful, and save you time, energy and aggravation.


Maine Collection Agencies: What They Can and Cannot Do

Posted by Marilyn Miller on March 14, 2018  /   Posted in Uncategorized

This post is not about the Fair Debt Collection Practices Act and the rights of consumers to be protected from abusive debt collection practices. Certainly, a debt collection agency must be in compliance with the law, but there have been many articles written on that subject. So, if you are reading this article looking for information on how to stop collection calls, stop reading now.

However, if you are a small Maine business owner or entrepreneur and you are not getting paid by customers, and want to hire a collection agency, this post will help you get a realistic idea of what you should and should not expect.



Here are some things your Maine collection agency  can (and should) do for you:

Help locate customers who have moved – A big part of debt collection is finding debtors and their assets. You should never pay an additional fee for research as it is an integral part of the collection process.

Give you ideas on how to improve your credit practices – The best collection is the one you can make in house without having to send to a third party.

Save your time and let you focus on your business while they focus on getting you paid – Certainly you should make an effort to recover money, but after a while it simply does not make sense to use productive time chasing bad debt. Also, debt collection agencies have special tools and training.

Advise you on information needed to assist with the collection and maximize results – Ask your collection agency to advise you on the process, and ask them to tell you what information they will need to get the job done.

Here are some things your collection agency cannot (and should not do):

Change the financial situation of your customers – If someone is in a cash crunch, you may not be able to get all your money at once, and you should be realistic and flexible with your agency if they ask you to accept small payments or a settlement. A good debt collector is a skilled negotiator, and they will work hard to get you paid, but you may have to be patient and be paid over time. Remember that most agencies are paid on a contingency basis, which means they only get paid when they get results for you. So, if they ask you to take a settlement or payment plan, it is because their experience tells them it is best option.

Ruin someone’s credit – We get it. It makes you angry when you do not get paid. However, credit reporting is only one tool and recent changes in the law lessen the impact of single item anyway. So,  one item reported to the credit bureau will not ruin anything. Focus not on being angry but on the goal of getting paid.

Charge fees that are not in your contract or prohibited by law – If you want to recover collection costs or charge interest on past due accounts, you must have a customer contract that allows it. In addition, you must be in compliance with state laws. Some states allow recovery of all or part of your collection fees, others do not.  Certain rates of interest are considered by law usurious, or excessive. A good customer contract will be your best friend. Contact your attorney today to get one.

Collect debts that are legally uncollectible – Each state has a time limit, or statute of limitations that governs how long a debt someone can be held liable for the debt. Also it is illegal to collect a debt that is under the protection of the bankruptcy court. So, do not wait to long to send accounts off for collection!

Collect debts from parties that are not liable for them – Once again, the need for a customer contract is important.  When you are providing product or service to a business, especially a new business, you should ask for a personal guarantee. A personal guarantee means that a business owner takes personal responsibility for debt of their company if they go out of business.

Similarly you cannot hold heirs responsible for a debt of a deceased relative. However, if there is an estate with assets you can make a claim against the estate in an attempt to recover.

In the end, it comes down to communication with your Maine collection agency. Use your agency not simply as a commodity but as a trusted partner. It is perfectly fine to have high expectations, but your expectations must also be realistic.

Collection Agency Cold Case Files: Are Old Debts Still Collectible?

Posted by Marilyn Miller on March 12, 2018  /   Posted in Uncategorized

A collection agency works with a contingency rate. This means that you pay no money up front. Your collection agency makes money when they get you paid. Therefore, many collection agencies want only the newest files, the lowest hanging fruit. These files are the easiest to collect. I certainly have some “fresh” files in my book. However, what about older files, files that are one or more years old? What about court judgments?

Statute of limitations may limit recovery.

The statute of limitations  is the maximum date that you can legally collect a debt. In Maine and in many states it is six years. However, each time your collection agency gets a payment, the statute begins anew.

One way to lengthen the statute of limitations is to litigate and obtain a court judgment. Judgments are normally good for between 10 and 20 years. So, if your customer has no assets today, they may have assets a few years from now. A judgment gives you the right to attach those assets.

How does a collection agency find assets?

A collection agency performs a service called “skip tracing” to locate information on debtors and their assets.  When I skip a debtor, I put pieces of a puzzle together. I use some specialized subsciption services, but also search the internet, including social media sites, court and land records.

What about bankruptcy?

Some people may seek protection from collection with the federal bankruptcy laws. Once you learn a customer has filed for bankruptcy, you must let your collection agency know immediately. You and your collection agency must immediately stop all contact and efforts to collect. In some cases, the debt will be discharged, which makes the debt uncollectible, and there is no chance for recovery. Sometimes, the debtor will enter into a repayment plan and you will get some or all of your money over time. In other cases, the debtor will not comply with the law, and the case will be dismissed. If a case is dismissed, you are free to pursue the debt once again.

So when can you recover a “cold case file”?

It all comes down to two factors. First, are assets available? There has to be something to get. Secondly,  your collection agency must be willing and able to dig into an older file. Some agencies only want the newer, fresh files, so make sure to ask.

It is going to cost you more money – higher contingency rate- to collect an older file. Accept the reality that you have nothing and that anything you recover is gravy.






Small Business Debt Collection: What Convinces People to Pay?

Posted by Marilyn Miller on March 07, 2018  /   Posted in Uncategorized

Small business debt collection is a group activity. The business owner should establish that that the recovery of delinquent customer debt is a priority, and give staff resources needed to tget the job done. Key staff members must commit to a regular review of aging accounts receivables.

Process is important, and so is understand the factors that will encourage delinquent customers and pay your bill.

  1. Leverage – If you have a product or service that customers want again, use your leverage. Old Fuel oil bills often get paid right after the first cold night. Pediatricians receive payment when parents need a physical form for camp or the start of a school year. If you have a some leverage, do not give it away. Whenever possible, do not continue to provide service to a customer who owes you money.
  2. Discounts – Before you hire a collection agency, consider offering a discount to your customer. Offer a discount that is less than what you would pay your collection agency. You can also “roll in” new sales with the old bill, giving a small overall discount. Remember though to be very clear that your offer is only available for a limited time. Be specific about the date that offer will end. Explain consequences if payment is not made. You will be amazed at how many people will pay a bill when offered a 5 or 10% discount, and you will lower your overall cost of collection.
  3. Ease of payment – Know your customers and make it easy for them to pay you. Some customers want to send you a check. Include an envelope with your bill. Other customers want to pay their bills online. Consider not only traditional credit cards, but newer methods like PayPal.
  4. Communication – A phone call or collection letter can get you terrific results. Do not be afraid to call a customer to ask them for money.
  5. Elevation – Each collection attempt should increase the urgency. Within your own organization, use senior management to reach out to delinquent customers. Let customers know that unpaid bills will be referred to your collection agency.

Small business debt collection is  not difficult. Use the tools you have available to you, and your business will benefit.

Reduce Debt Collection Costs: Close Barn Door Before Cows Get Out

Posted by Marilyn Miller on March 05, 2018  /   Posted in Uncategorized

You can significantly reduce debt collection costs with a customer contract before you grant customers credit.  However, too many small business owners do not have a written contract in any form. If you wait until after the transaction,  it is, as my mom would say, “Closing the barn door after the cows have gotten out”.  Good solution, but too late to be of any use.


How do customer contracts help debt collection?

Customer contracts are your most important tool.  They often make the difference in your ability to collect a debt, or in your collection agency’s ability to do so. Customer contracts are often the very thing that convinces a customer to pay.

Can I use an oral contract?

Oral contracts are legal in Maine and in many states. However, an oral contract leaves the terms and conditions open to interpretation. Take it from me – when people owe money, they may “remember” the terms differently than you do. Get it in writing!


How about finance charges?

You must have a signed contract to charge interest on past due balances. Business owners often tell me their finance charges are on the invoice. Your customer will not see the invoice until after the work is done.  That is too late!   You must prove that the customer agreed in advance to pay finance charges.


What about the costs of collection – can I pass them along?

You need a contract to recover costs of collection, that is attorney fees, collection agency fees and such. Each state has different laws regarding your ability to recover it, but in all cases, you must have a signed agreement that predates your transaction.

If you wait until after the transaction, and your bill goes unpaid, it is, as my mom used to say, “Closing the barn door after the cows have gotten out”.  Good solution, but too late to be of any use.


What is a personal guarantee?

A personal guarantee is a contractual promise by the owners that they will personally pay the debt if the company is unable to pay. Yesterday, I received a request to collect a large bill that is owed by a company that is out of business.  They had a contract, but it is of no use because the company and its assets are gone. In this case, a personal guarantee would have been helpful.

When I was thinking about writing this blog, I thought that a good analogy for the solution that comes too late, or trying to enforce contractual terms without a contract would be to compare it to putting in a sprinkler system after a fire.  However, while yes, you would not be able to prevent a fire retroactively, you could learn the lesson and install sprinklers to prevent future fires.

So it is with your customer contracts. Use them to reduce debt collection costs. If you do not have a contract, get one today. You do not need a lengthy document. Even a quick email works. Update customer contracts annually.  Use a personal guarantee with business customers.

In other words, close the barn door before the cows get out, not after!

Collection Agency: More than Phone Calls and Credit Reporting

Posted by Marilyn Miller on March 01, 2018  /   Posted in Uncategorized

Most people believe that a collection agency simply makes phone calls and reports debts to a credit rating agency. Certainly telephonic contact is an important part of the process. Although I contend it is overrated, credit reporting can perhaps assist with recovery.

So what else does your collection agency do?

Collection agencies have specialized tools to locate your customers and their assets.  I spend a good part of my day looking for people and their assets. “Skip tracing” is the research process in the credit and collections industry. The term comes from private investigation firms who would look for information on people who had “skipped town”. To me,  skip tracing involves finding new information (address, phone, email, assets) of customers who have moved.

Why is skiptracing important?

How important is skip tracing to the collection process? Lexis Nexis, a leading provider of research tools for law, government and collections estimates that 35% of delinquent debtors move annually. Also, 50% of files placed for collection will need some sort of skip tracing.

Collection agency research might reveal a name change due to marriage or divorce, new  phone number, or a new job. They will research a file under consideration for possible legal action  to make certain there are assets (job, bank account) to justify legal action.

Does skiptracing cost more?

Your collection agency should provide skip tracing as part of their services. Although some agencies charge a higher contingency rate for collections involving skip tracing, you should not have to pay an additional fee for it.

What sources are used to skiptrace?

Services like Lexis Nexis and Transunion offer automated services collection agencies use. However, these databases use public information.  If a person must have something in their name – a utility bill, driver’s license – anything. If not, chances of finding them with this method is next to nothing. Still, it is a good first step.

Collection agencies may also can review credit reports not only to obtain contact and asset information, but to get an idea of the debtor’s ability to repay the debt.

Often a collection agency will review court and land records. Solid research drives the strategy. As an example, we once selected a file for litigation. The debtor had a good job and owned a home. However, she had multiple judgments liens against her, more than the value of her home.

Skip tracing becomes an art when you take it to the next level and review the debtor’s social media profile. You would be amazed at how much information can be obtained from Facebook, LinkedIn or a simple Google search.

I love working puzzles, and quality skiptracing is just that. If your collection agency is not doing this for you, you are missing a huge piece of the puzzle.

Maine Small Claims Court: Bloopers and Blunders

Posted by Marilyn Miller on February 28, 2018  /   Posted in Uncategorized

Utilizing the Maine Small Claims Court to recover money owed to you can be either a rewarding or a frustrating experience. How it turns out is largely up to you, and how you prepare.

If you are going to be successful in Small Claims Court, you have to make sure the case makes sense in a number of different ways. If not, you will add the a very large list of Maine Small Claims bloopers and blunders:

“I went to Court and won a judgment but I was never able to get paid”

The court does not collect the money for you. If you win your case, you obtain a court order, or judgment that you must collect yourself. Before you file a lawsuit, research your customer. If you believe the customer has assets, it makes sense to go forward. If not, you may wind up with a judgment that is useless.

“I did not serve the lawsuit correctly, so I was only able to get a judgment against one person, instead of two.”

Each party to a lawsuit must be served separately. If you are suing two people each must get a copy of the lawsuit. There can use the mail or a sheriff to get service, but you must prove to the Court (with an affidavit) that each party received the lawsuit.

“I sued a customer for $500. They did not show up for Court so I won a default judgment. Shortly thereafter, the customer appealed the lawsuit. We had a hearing, and my judgment held. However, when I did not pay, I had to bring customer back for a disclosure hearing. I did not realize I would have to go to Court three times!”

Maine Small Claims Court judgments can be appealed within 30 days after the judgment. A disclosure hearing is used to determine what assets, if any, the Defendant has to pay the debt. Before you start, realize that you may need to go to court more than once. Is the time away from your business worth the effort?

“I filed a number of lawsuits against delinquent customers. I did this because I thought it would be cheaper and easier than hiring a collection agency. Boy, was I wrong!”

If the only reason you are going to court is because you think it is cheaper then going to Maine Small Claims Court, think again. There are many collection agencies out there, and you should be able to find one with a competitive rate. All too often, business owners obtain judgments and then still have to hire a collection agency to actually get paid. Collection agencies have the experience and specialized tools to find people and assets. Plus, collection agencies are paid on contingency basis, so you will likely have no out of pocket expenses versus paying Maine Small Claims Court fees and costs.





Small Business Cash Flow: Six Simple Steps

Posted by Marilyn Miller on February 26, 2018  /   Posted in Uncategorized

Small business cash flow is a challenge for any business but for a small business where the owner, and most of the staff often wearing two – or more – hats, it can be downright elusive. Your business plan likely involves details on how to grow your sales and manage your day-to-day operations, but have you focused on ways to keep an even stream of revenue coming? If not, you must, and now.

Here are some simple steps you can take today to improve your small business cash flow:

Billing – Your bills must be clear and concise. They must be accurate. They must be sent promptly and regularly. Make certain you have the right contact for billing since the person who hires you may not be the person in charge of accounts payable. Ask customers how they would like to receive bills – paper or electronic. Billing may seem like a simple issue, but so many small businesses owners get it wrong.

Credit – Offering credit terms can give your business a competitive edge. However, not every customer deserves credit from you, and not all customers should have the same credit limit or terms. Establish guidelines that work for your business and your customers. If you need an idea about how to do this, think about how your bank treats you when you go for a personal of business loan. They collect information from you, examine it, and make an informed decision.

Deposits – Obtaining some money at the start of a project is a smart idea that can not only give you some cash flow, but with some “skin in the game”, your customer becomes part of the procedure. Any customer who enters a payment plan should be required to provide an initial deposit. Document all payment plans and make sure customer approves of them.

Payment Plans and Methods – Make it easy for customers to pay you – whatever it takes. Well documented payment plans are a good start. Experiment with different methods of payment that work with your customer base. Some customers still pay bills with a paper check, and sending them an envelope every month will keep them on track. Other customers want to pay online, with PayPal, ApplePay or another method of payment. Know your customers and work with them to keep payments regular.

Receivables Management – Do you know how much money you have outstanding at any given time? It is important to have a handle on your outstanding accounts receivables. Stay on top of them, and plan to recover any delinquencies.

Small business cash flow need not be a mystery. It is all up to you, and the steps you take to get there.

Collection Agency or Attorney: Which to Use for Debt Collection

Posted by Marilyn Miller on February 21, 2018  /   Posted in Uncategorized

I am often asked which option – collection agency or attorney – is the better option to recover money owed to a business. The short (and very true) answer is that it really depends on each particular business, each file and your collection goals. You also need to determine which files make sense to litigate? Are there assets to attach? Decide the cost vs. benefit of legal action. Here are some guidelines:

  1. Compensation Type – Collection agencies usually get paid a contingency rate, which means that they do not charge anything up front, but retain a percentage of sums recovered. Some attorneys may also work on a contingency basis, but many will by the hour, or by specific action. Let’s look at specific examples. I received a file this week which is a $410.00 bill for lawn care. Client went to his attorney, who filed a lien and mechanics lien and charged 265.50. However, to perfect the mechanics lien in Maine, a lawsuit needed to be filed, and attorney wanted additional funds for a lawsuit. Client realized that any further out of pocket expenses made no sense and hired us. We are working on a contingency basis and will attempt to recover the debt plus the legal costs. Other attorneys will charge a flat fee to send a notice of claim (collection letter). If the letter works, it is a great way to collect money. If it does not work you have thrown good money after bad.
  2. Asset search and research – Do you know if your customer has assets? Do you know where they work or bank? If you have a good deal of confirmed information on your client, and the size of a debt makes sense, you could ask your attorney to file a lawsuit. Once you have obtained a court judgment, you can attach assets. But if you do not have information on your customer, getting a judgment may be a waste of time. I recently looked at a file which was an uncollected judgment which they paid their attorney to obtain. The attorney had filed a judgment lien after receiving the judgment, but had filed it in the wrong county, which basically  made the lien useless. We were able to locate the home and file the lien in the correct county, thereby securing the interest of our client.

If you have a good number of smaller uncontested files and want a focused, ongoing collection effort that involves communication with your customers by letter and phone, then a collection agency is your best bet. Do you want delinquent customers reported to credit bureaus, or need research done to find customers who have moved? A collection agency is a good option here too.

A file involving a dispute that will probably result in litigation is best for an attorney. An attorney demand letter may be just the right thing to get you paid an avoid litigation, and is usually inexpensive. What happens if the letter does not work. We recently received a file that had not responded to an attorney letter. The debt was 1,000 and the letter cost our customer $150.00. paid up front. The attorney said he would need an hourly rate to continue working the file. We got involved and called the business every day until he paid the bill.

I get calls all the time from companies who have a large disputed case they want us to handle. I do not mean to say that collection agencies cannot handle disputed files – they can. However, if the only reason you are hiring a collection agency is to avoid paying an attorney retainer, then you may be making a big mistake.

If you want to hire a collection agency, find an agency with experience in your industry. Yes, you should look at the agency’s rates, but understand what is (and what is not) included in the rates.

If you want to hire attorney, ask them about their process if the initial demand letter does not get a payment. Do they follow up by phone? Do they have ability to research and find assets? Ask the attorney Are they going to handle the post judgment as well as the court hearings? Finally, find an attorney that understands collection law. The attorney who handled your divorce or drew up your will may not be suitable.

There are times when either option can get the job done, and you can make a decision based on the collection partner you think you can work with in the long term. Your best bet is to find a collection agency that has a relationship with experienced collection attorneys. That way, you get all the benefits of both approaches. It is one thing to go to court and get a judgment, but another thing entirely to collect on a judgment. The right partnership between agency and attorney will deliver judgments that collect!



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