Author Archives Marilyn Miller

Maine Small Claims Court: Getting it Right

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

Maine Small Claims Court exists to give small business owners and individuals a way to recover money in a cost-effective and relatively simple way. Small Claims are limited to $6,000 and plaintiffs can take their cases directly to Court, saving money on attorney fees.

Maine outlines the process in a detailed guide and claims are considered in local courts. Easy, right? Well, sometimes.

People who use the small claims court effectively learn that not every case should be litigated. They carefully research to make sure their customer has some means to pay. They understand that simply getting a judgment is not enough. The Maine Small Claims Court does not collect the money for you. If you win your case, you are awarded a judgment, and become the judgment creditor. Your customer, the defendant, becomes the judgment debtor. The judgment you obtain is a court order that details how much the judgment debtor must pay you, and when. If they do not pay you within the specified time, you can begin post-judgment collection. In Maine, you can bring the debtor back to court for a disclosure hearing to determine which assets they have to pay the debt. After disclosure you may decide to place a lien on property owned by the debtor or recover your money using a bank or wage garnishment.

People who get the Maine Small Claims Court system right make certain they bring the right claims to court. They make a decision on the economics of the file – realizing that at least one, and possibly several trips to court may be required. Since costs average around $100.00, but could be significantly more, they choose carefully. They  make sure they have the correct address for serving the lawsuit. If the debtor is a company, they make certain they name the correct business entity.  When they go for the Court hearing, they are prepared. Most importantly, they have a realistic view of the process and realize that it may take some time to get paid.

People who get the Maine Small Claims Court system wrong do not prepare. Most of the time, they are suing people solely because it appears to be less expensive than hiring a collection agency. It can be, if a quick settlement can be reached. However, less than twenty five percent of cases settle easily. The balance need a considerable effort for recovery. I cannot tell you how many times we are contacted by small business owners to collect judgments that are incorrect, or are against companies or individuals who do not have any means to pay.

The best way to get the Maine Small Claims Court right is to realize that is only one tool in the debt collection toolbox. Have a strategy that includes a solid in-house collection effort, a relationship with a debt collection agency and a working knowledge of the Maine Small Claims Courts, and success is guaranteed.

Medical Debt Collection: All About Communication

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

Medical debt collection has been in the news lately because more and more Americans are unable to pay what they owe because of higher out of pocket medical costs. There are differing arguments, based mainly on political ideology for a better healthcare/insurance system. However, the system we have today provides both challenges opportunities for health care provider.


Each part of your service delivery provides an opportunity to communicate, and better communication can prevent problems down the road.

  • New Patient Intake – Before a patient is seen, collect as much information as you can. Many practices have their patient forms online and require them to be completed and provided at the first visit. This is great, except that insurance information should be collected and verified well before the first visit. Many of the bills we see come for collection involve inactive insurance policies that were not presented until the date of service. As much as practical, verify insurance before the first visit and make sure to communicate information on any out-of-pocket costs to the patient.
  • Patient Financial Responsibility – Each new patient should sign a statement promising to pay any out of pocket costs. The statement should inform patients when you expect to be paid and the types of payment plans you are willing to accept. Update each year.
  • Patient Billing – Once insurance has processed the claim, patient statements should be sent that clearly indicate charges, payments and adjustments. Bill promptly and regularly.
  • Collection Letters – If, unfortunately, patients fail to pay you on time, have a collection letter ready to send out. Your letter should be polite but firm. Again, give a specific time period for payment. You can also send a second letter with increasing urgency, and advise patient that you will take further collection action if payment is not received by the due date.

Medical debt collection starts when the patient walks in the door. Better communication means fewer files referred to your collection agency.

Collection Agency: Why Are You Waiting?

Posted by Marilyn Miller on December 10, 2018  /   Posted in Uncategorized

Delays stink. If you are stuck in traffic, or if your flight is delayed, it can wreak havoc with your schedule. A delayed flight could lead to a missed meeting which could result in a blown business opportunity. Small business owners who delay getting outside help collecting from delinquent customers are inviting some unfortunate consequences.


While small businesses should attempt to recover debt on their own, in-house efforts should be limited in time, and if they are unsuccessful, help from a third party is needed, usually a collection agency or an attorney. Businesses should set their own limits on how they want to wait as each business is different, but they must stick with their self imposed deadlines.

Too much delay is like gambling with your accounts receivables. Here are some issues that can develop:


  • The delinquent customer could move out of state. This would not make it impossible to collect but it will likely make it more difficult.
  • The delinquent customer could sell an asset that you might have been able to attach for payment later on.
  • A business customer could go out of business. Your customer could incur more debt, be less able to pay you, or even declare bankruptcy.
  • Other more proactive creditor could take legal action and place liens on their property, wages, etc. You would then be behind those, and there might not be enough equity to get you paid.
  • You could incur a higher contingency collection fee. Higher fees for older accounts (over a year, or in some cases, over 180 days) are common, because older debts are more difficult to collect.

Generally, if a customer has ignored you, or defaulted on promises to pay you for more than 90 days, you have a problem, and you need to get help. If you want to wait a but longer do so, but know the risks involved.

How long do you wait before sending a file to your collection agency?

Collection Agency or Letter Service: Which Do You Want?

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

Debt collection involves a number of activities. Some debts are simple to collect, while others are more difficult.



More often than not, debt collection involves more than simply sending letters.

Yet, yesterday I received an email from a collection agency in another state promoting a very low fee to send four letters. To get the lowest rate, you have to submit a larger number of files. You pay the per file fee upfront. No phone calls are made for the fee, and all funds are sent directly to you. Sound great, no?


Let’s do the math

A small medical office sends 100 files to collection. The fee is $ 8 per file, so $ 800 is paid up front. Remember, you pay the fee whether or not the letters work, but if it does work, your only expense is the initial fee.

Twenty debtors pay from the letter, and you recover $1,000, slightly more than your original investment.  You ask the collection agency what will happen to the remaining  files, and they quote you the rate for real collection,  the standard contingent rate of  35-50%. The new contingent rate is in addition to the initial fee, which is, of course, non-refundable.

Let’s say the total value of the money owed to you in those 100 files is $ 10,000. You have recovered 10% of the money owed to you. Can your business afford to lose that $ 9,000?

Remember that four letters are likely sent over consecutive months, which means that your contingent rate will likely be higher, as debt collection rates increase as debts age. The debts get staler, people move and incur more debt. Trust me, the longer a debt is out there, the more likely money owed to you will be used to pay other bills.

Agencies that use this approach will only use it on current accounts, that is, files that are around 90 days old. It also assumes a volume placement Most small businesses will not have hundreds of collection files.

You should be sending collection letters yourself. Your collection agency should be contacting debtors by mail and phone, and researching for new information.

Effective debt collection is about so much more than letter writing. The choice is yours.


Debt Collector: A Day in the Life

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

What does a debt collector do all day?

A debt collector does spend countless hours dialing for dollars. While telephone contact is a big part of what we do every day, it is only a small part of our plan to get our customers paid.


Morning Coffee and Promises

The first thing I do every morning is review the daily list of people who have promised to pay. A debt collector who sets debtor promises and diligently follows up on them. Some people do exactly what they say they will do. Others do it eventually, after several delays. Still others never intend to pay, and when they promise you, they are saying what they know will get you off them phone.


An experienced debt collector can differentiate between real promises and not-so-real ones. If someone does not pay on a given date, they can inquire as to the reason for non-payment, and perhaps work out a better plan for repayment.  For example, I recently spoke with a woman who owed my dentist client over $1,000. The first time we spoke, she told me she could pay in two weeks. I set the promise and followed up on the given day. I could not reach her for a week, despite multiple attempts. She did finally return the call, and told me that she could not make the payment. By carefully and compassionately questioning her, I learned that she did not understand that she did not have to pay the entire payment all at once. I was able to set her up on a payment plan of $ 100.00 a month, with payments scheduled to correspond with her biweekly paychecks. She stayed on schedule and paid the debt off as promised.

Customer Communication and Coaching

This week, I worked with an accountant to collect a past due balance. The debtor had paid half his bill, but had failed to make the second payment and had stopped responding. When we approached the debtor, who owed $2,500, he told me that he had been promised that he could pay only $700 to settle the balance. He had, in fact been told that, but when he failed to pay promptly the accountant believed his settlement offer could be withdrawn.

My accountant customer had an oral contract (for settlement at $ 700) with his customer. While oral contracts are valid, they are subject to the memory of each party in the event of a dispute. After fifteen years as a debt collector, I can assure you that in a dispute, each party will remember only the part of the deal that benefits them.

I advised my client to accept payment of $ 700.00. I advised the debtor (in writing) that we would accept the settled amount if and only if payment was made within a week. The debtor wired the money to the accountant the following day.

Afterwards, the accountant and I discussed how to document settlement offers in the future, that is, always put it in writing, lay out exactly how and when the debt is to be paid, and describe what will happen if payment is not made as promised.

My client took a little less money, but he got his money quickly and avoided a long, protracted dispute. He also learned how to protect himself in the future. I call that a good deal!

Skip, Skip, Skip to My Lou!

A big part of being a debt collector is research to find people and their assets. In our business it is called “skip tracing” and it is one of the favorite parts of my job. I consider skip tracing a critical part of my job, and I am really good at it.

Skip tracing combines using different sources (some public, others purchased) to find people or to make an assesment of their ability to pay. It is a critical part of our strategy and process.

If you are considering hiring a debt collector, you must ask about their skip tracing capabilities.

Legal Beagle

I am not an attorney but I work with attorneys nearly every day. Unfortunately there are times when the only way to collect a debt is to commence litigation and obtain a judgment. I have seen far too many judgments that are not collectible for various reasons. Therefore, I spend a good deal of time choosing and preparing only the best files to send to our attorney partners. We assist by managing the legal process, especially post judgment collection.

So yes, there is a bit of a grind in making what can seem like endless phone calls, or stuffing and mailing hundreds of collection letters. However, the variety of tasks and my commitment to the right of my clients to be paid for their work keeps me going.

How To Avoid Hiring a Collection Agency

Posted by Marilyn Miller on December 03, 2018  /   Posted in Uncategorized

Some small business owners avoid hiring a collection agency, ignoring that they have a problem with their accounts receivable. They simply put on blinders and focus on other things. They forego hiring a collection agency by claiming that is it too expensive, takes too much time, or not worth effort. While this is certainly an effective way to avoid hiring a collection agency, it is self-defeating. Delinquent accounts receivable can be ignored, but they do not collect themselves.

So how can small business owners address their delinquent customers, collect money owed to them and still avoid having to hire a collection agency?


Discontinue extending credit to customers.

If you do not extend any sort of credit by having all customers pay up front, then you will never have an issue with customers not paying. How feasible is this for your business? In many cases, it will make you less competitive. You would be avoiding one issue by creating another.


Require a customer contract for all credit customers

Lay out the terms of your credit agreement with customers before providing your product or service. Communicate your expectations for payment in advance. Explain how much, when and how the customer will pay, and explain what will happen if they do not pay as promised.

Your contract does not have to complex. Send a customer a quick email with details of payment and asked them to email back their consent, and you have a simple contract.

A customer contract can help settle disputes before they happen. A contract should be in writing. Oral contracts are legal but open the possibility of different recollections of the terms and conditions of the oral contract.


Make it easy for people to pay you.


People will pay you more regularly if you give them different payment options. You want your bill to be considered as important as any monthly bill. More and more people pay their bills online. If you give customers the option of paying your bill online, it can put your bill on equal footing with other obligations.


Design and implement a process for contacting delinquent customers and work it consistently.


Treat accounts receivable management with the same importance you give to sales, operations or customer service. Review accounts receivable regularly and contact customers as soon as they are late. Use a collection letter and personal phone calls. Be a friendly pest.

Can you avoid ever having to hire a collection agency? Maybe, maybe not. You can however greatly reduce the number of customers you refer for outside collection, if you give your accounts receivables the attention they deserve.



Hiring a Collection Agency: Five Key Considerations

Posted by Marilyn Miller on November 30, 2018  /   Posted in Business

Hiring a debt collection agency could be a great move for your small business. But how do you know if you are hiring the right agency for your needs?

Here are 5 key things you should look for before you hire a debt collection agency:

1. Licensing, bonding and reputation – For the collection of consumer debt, state laws vary as to requirements for licensing and bonding. Make sure you know what your state requires before you begin your search. For the collection of commercial (business-to-business) debt, a license is usually not required. For any type of firm, you should check their online presence and ask for references.

2. Fees – Collection agencies are paid in one of two ways: flat fee or contingency. Each method has its pros and cons, depending on your business. The lowest fee is not always the best fee. What will the agency do for the fee they charge you, and do you believe that will be sufficient to get results for you?

3. Research – People move around a great deal these days and the ability (and willingness) of an agency to find people and their assets is key to success.

Ask a debt collection agency what sorts of research tools they have. Never pay an additional fee for research. It should be part of any collection compensation plan.



4. Credit bureau reporting – As we have stated before, we believe credit bureau reporting has its benefits and risks, and you should know about both before you start working with a collection agency. Reporting a debt to credit bureaus is only part of the process. What will the collection agency actually do to reach out to your customers and convince them to pay?

5. Personality – Do your collection goals and your company personality fit with the agency? How will they represent you to your customers? Do they have experience working with companies like yours and can they provide references? Know your goals and communicate them to the agency.

Small Business Debt Collection: The Truth About 10 Common Myths

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

Does every small business not have an active plan to recover bad debt? Good question! They certainly do need to focus on their accounts receivables just as they focus on new business sales and customer service. Nothing will hurt cash flow more than slow-paying or non-paying customers. Some business owners are hesitant to tackle their accounts receivables because of some old myths about cash, credit and bad debt collection.


Here is the truth about some common myths about credit and collections. Some items are linked to detailed articles on the subject. Check them out!

  1. Accounts Receivables are NOT cash Your receivables are a promise to pay. You cannot grow your business with them, pay your employees with them or use them to buy new equipment. If you let your receivables sit on your books too long, the promise to pay becomes less likely to be realized, and may disappear forever. The money is not earned until it is in your bank account.
  2. Small businesses cannot get a tax benefit from writing off bad debt. You are throwing money away if you forego recovery of your accounts receivables thinking you can just “write off” the balances and obtain a tax credit.
  3. Debt collection is not too expensive.  You can and should negotiate a competitive rate with the agency, but not all rates are created equal. Most collection agencies work on a contingency basis, which means you pay no money upfront, and the agency retains a percentage of what they collect for you.
  4. Waiting too long to pursue bad debt is not a good strategy, and can hurt your business.  Delay can hurt you. You are losing the use of the money, and you are also betting on the customer still being around or being able to pay when you decide it is time to collect. 
  5. Payment plans should never be based on a handshake. They should always be documented
  6.  Going to court and getting a judgment is not always the best strategy. Not all claims should be litigated. Part of effective small business debt collection is having a collection strategy that varies according to the nature of the debt.
  7.  Credit bureau reporting is not the best way to collect money. There are risks associated with credit reporting that you should know.
  8. Bankruptcy does not always mean you cannot collect at least some of your money. Here is some good information on what to do if a customer declares bankruptcy. 
  9. Bounced checks can be recovered. Laws vary by state, and you must follow the law, but you can not only recover the check amount, but also associated costs.
  10.  Collection agencies do not  always buy debt. In fact, many small business local collection agencies do not buy the debt, but rather work in an agency agreement with the original creditor. Most of the large debt portfolio buyers purchase debt from banks or other lending companies. 

Collection Agencies on Cyber Monday

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

Collection agencies rely to some extent on technology to recover bad debt for you. In order to achieve the best results for you, they use technology for processing payments, communicating with your customers and also to research delinquent customers to find new contact information or determine ability to pay.

Payment technologies should align with your customer and how they like to pay.

People do not like speaking with collection agencies (shocking, I know) so by making it easy for them to pay without speaking with anyone,  collection payments become like other bills people pay.  In the past 15 years, we have seen a complete reversal in how people pay us with a majority paying online through our payment portal versus mailing checks.

Communication with delinquent customers is easier with enhanced technology.

Depending on the type of collection, collection agencies can use email or text to communicate with debtors. It works well for all commercial (business-to-business) collections, and in some cases for consumer (business-to-consumer) files. For consumer files, however,  consent is mandatory before contacting consumers by email or text. Collection agencies must also follow the law as respects required disclosures. For medical collections, collection agencies must comply with HIPAA by using only secure methods of communication.

Technology is used by collection agencies to locate people.

Collection agencies call the process of researching debtors “skip tracing“. Collectors use both proprietary sites from companies like TransUnion to find new addresses, phone numbers and to assess the ability of a debtor to pay. A good researcher also uses public information from social media sites to come up with a full profile. Since nearly 75% of consumer files referred for collection need some sort of research, this part of the collection process is essential.

In all of these cases, technology assists collection agencies do their job. However, using only technology without human input often comes up short. For example, collection agencies often batch process files, which means they send huge spreadsheets of data for machine processing. If the process ends there, the job is only half done. It takes a human being to review public data and social media sites to come up with a full profile.

The magic comes when collection agencies use the right balance of technology and personal contact. Technology is great for processing payments, but it takes a person to contact people and set up payment plans.


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