Debt Collector: What to do if Contacted by Collection Agency

Posted by Marilyn Miller on April 22, 2019  /   Posted in Uncategorized

I have been a debt collector for a number of years. My clients are not big banks or credit card companies. My clients are small business owners. When small business owners do not get paid, it impacts them immediately. They cannot pay their bills, or feed their family. I am passionate about the right of my customers to be paid, and I am proud to be their advocate.

My job is to walk the line between the creditor and the debtor: to negotiate and come to an arrangement that works for all parties, while all the time remembering that my number one goal is to get my client paid. Most people want to do the right thing, and they want to pay what they owe, but life gets in the way. Others may just need more information or have a valid dispute.

Every single one of my customers performed their service or delivered their product expecting to be paid for it. Just imagine if your boss told you at the start of the work day that you were not going to be paid. If you are unable to pay, speak to your creditor, and you can perhaps avoid having your file sent to a collection agency.

However, if if you are contacted by a collection agency, here is some advice.

  • You have the right to be treated fairly and respectfully. Consumer (business to consumer) debt collection is governed by the Fair Debt Collection Practices Act (FDCPA). Debt collectors must provide verification of the debt they are attempting to collect if you ask for it. They must not be abusive or deceptive. The FDCPA is a protection against abuse. Although some “Stop Debt Collector” ads may lead one to think otherwise, it is NOT a way to get out of paying a debt. Even if you successfully evade the debt collector, a valid debt does not go away unless it is out of statute or discharged in bankruptcy. Commercial (business to business) debt collection is not as highly regulated, but still commercial debt collectors cannot break the law.
  • While there are certainly bad players out there, there are also many good reputable collection agencies who recover money for businesses and help the economy. Each state has different license requirements. Check with your state, or do not be afraid to call your creditor to make sure the collection agency is on the level.
  • If the agency checks out, do not ignore them. If you do not wish to speak on the phone, respond in writing. Ignoring a debt does not make it go away.
  • A debt collector’s job is to get a debt paid. If you do not wish to pay the agency, pay the creditor directly, but let the agency know you have done it so that you get credit for the payment.
  • If a debt collector is calling your number and looking for someone else, contact them and let them know that they have the wrong number. People change phone numbers often these days. If you do not let the collection agency know, they have no way of knowing they have the wrong person.
  • Remember that the debt collector did not cause the debt and that they too, are in a tough spot. If you are treated with respect, be respectful in return, you may find you can reach a settlement with the least amount of stress.
  • Come up with a plan to pay off the debt, to the best of your ability, and communicate it. Be reasonable and do not over-commit. In the same vein,  suggest as much as you can so that you can get the debt paid as quickly as possible.

Medical Debt Collection is All About Communication

Posted by Marilyn Miller on April 17, 2019  /   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: Focus on Recovery, Not Loss

Posted by Marilyn Miller on April 10, 2019  /   Posted in Uncategorized

Small business debt collection should focus on recovering as much as you can, not on how much you have lost.

When a customer does not pay you, the amount owed becomes part of your uncollected accounts receivables. It is, at best, a promise that you will get paid at some point. Some businesses can sell or borrow against their open receivables, an option only available for certain industries in specific circumstances.

Most of the time, small business owners do not have access to sophisticated factoring options, and have to find a way to manage their delinquent accounts receivables. All too often, they deal with them by ingoring them, or by holding on to them far too long before deciding to hire a small business debt collection agency.

As delinquent receivables age, cash flow tightens. For a small business owner with tight margins, it is upsetting. Many small business owners are heavily invested in their community, and consider customers like family, so when they do not get paid, it can feel like betrayal, and with betrayal comes anger.

At some point, you are going to decide that you are mad as hell and that you are not going to take it any more.

Small business debt collection then becomes a process based in anger and betrayal. Collection agencies usually work on a contingency rate basis, which means that they do not charge anything up front, but rather retain a percentage of sums collected as compensation. While small business owners like this approach because there is no upfront cost, they resent the collection agency “taking part of their money”

As a small business debt collection professional, I get it. It stinks when someone stiffs you. However, your collection agency is not your enemy. They did not cause the debt. They are trying to help you. When you hire a collection agency, you do so because you have nothing but an aging receivable, which is only a promise to pay. You have zero.

Focus on what your collection agency recovers for you. Something really is better than nothing. If you see more and more delinquent customers, take a look at your credit practices and refine them.

It is a process, and one well worth your time and effort.

Maine Small Claims Court: Getting it Right

Posted by Marilyn Miller on April 08, 2019  /   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.

Credit Customers: I Don’t Think That Means What You Think

Posted by Marilyn Miller on April 02, 2019  /   Posted in Uncategorized

Credit customers – those select customers you trust to pay you over time – can be a boost to your business. Offering terms to customers will allow you to remain competitive and help you grow.

Offering credit involves a great deal of trust with your customers, and requires that you communicate your terms clearly from the onset.

All sorts of businesses offer all sorts of credit. A medical office that accepts insurance offers credit while the claim is being processed. The doctor trusts that insurance is valid, and that patients will pay any costs not covered by insurance. A manufacturer or service provider trusts that customers will abide by agreed credit terms by paying on time.

The best way to make sure customers stay on track is to memorialize credit terms in writing, in a customer contract.

What happens when you do not put credit terms in writing?

While oral contracts are recognized as valid in most states, they are also open to interpretation. In the event of a dispute, chances are you and your customer will remember things differently.

In The Princess Bride, one of the characters uses the word, “inconceivable” about things that are anything but. In response, another character tells him, “You keep using that word. I don’t think it means what you think it means.”

In fact, every day we speak with people who believe they do not believe they owe anything – despite evidence to the contrary – due to something they were told, and what they believe they heard.

You say, “Don’t worry about the bill”. They hear, “You do not have to pay anything.”

We recently attempted to collect a debt from a gentleman who had suffered a tragedy in his family. Our client, a doctor had reached out to convey his sympathy, and told the patient, “Don’t worry about the bill at this time. Take care of yourself and your family, and we can take care of the bill later”. The patient only heard the first part.

You say,”You’re all set”.  They hear, “You do not have to pay anything”.

To be fair, “you’re all set” really might mean that no money is owed. However, if you are a medical office and tell a patient she is all set, you likely mean to say that you have the information you need to bill the insurance. If you have set up a recurring billing plan, and want to advise the customer that you have all the information you need, you might tell them they are all set, but only in the context of being able to process the payment.

Words matter. Communication is key. If, in the above instances, the creditors had taken time to have the customer sign a contract confirming their financial responsibility, what they really meant to say would not be in question.

Get it in writing!


Statute of Limitations: How Long Can You Collect Your Money?

Posted by Marilyn Miller on March 25, 2019  /   Posted in Uncategorized
What is the statute of limitations for debt in Maine and how is it important to your business?

I have written a great deal on the many issues that could arise if you fail to monitor your accounts receivables diligently or if you wait too long to hire a debt collector or use the small claims court to recover money owed to you.

One of the most difficult conversations I have with small business owners is telling them that the statute of limitations has run out, and the debt is now not collectible. The statute of limitations is the period of time you can pursue a debt owed to you.  In Maine, the statute of limitations is 6 years. Why anyone would wait 6 years is beyond me, but it happens all the time.


Some people get busy or do not have the appetite for bad debt recovery. Still others may feel the effort involved is not worth the potential recovery if the person or business does not have money or assets to pay what is owed. However, just because they do not have the means today does not mean they will not have them tomorrow.  If you get one payment, even a small one, before the statute is up, you restart, or “toll” the statute. Similarly, if you believe there are available assets, if you take your claim to a Maine court and are awarded a judgment, your judgment is good for 20 years. Any number of things can change in 20 years.

Of course, if you get a judgment it will not collect on its own.

You have to continue to reassess the debtor and look for assets. Here is a case in point.  We received files from half a dozen business owners who were all owed money by the same person. All his assets were over-encumbered, and there appeared to be no way to recover anything at all. Some of the businesses went ahead and sued the debtor, while others did nothing but wait. After a few years, the debtor received a large monetary award. Those creditors who had monetary judgments were able to immediately attach the award and recover their money. Sadly, those who had waited could recover nothing because the statute of limitations had expired.

You certainly cannot afford the time or expense to take every case to court, so it is important to choose wisely. Sometimes it is a leap of faith, or a feeling that your customer will one day have the ability to pay, and other times it is just luck.

There are also many small business owners who are unaware that they have 6 years to pursue collection of a debt.  Of course, the longer you wait, the harder it may be to find the debtor, and you will pay a higher fee to the collection agency, but something is better than nothing.  If you do place an older debt with a collection agency, make sure they have the ability to “skip trace”, or locate your customers, since people are increasingly mobile in today’s world.

I do not mean to recommend that you wait 6 years. 

You have a problem if you have not been paid after 90 days, and you need to take action. Remember, those aging receivables sitting on your books cannot feed your family, pay your employees or grow your business. Cash flow is king, and you can control it.

Debt Collection Agency or Letter Service: Which Do You Want?

Posted by Marilyn Miller on March 20, 2019  /   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 4 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 dental 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, more than your original investment.  You ask the collection agency what will happen to the other files, and they quote you the rate for real collection, which will be the standard contingent rate of anywhere from 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 4 letters are likely sent monthly, 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.

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.

Consumer Rights and Creditor Rights: A Debt Collector’s View

Posted by Marilyn Miller on March 18, 2019  /   Posted in Uncategorized

Consumer rights and creditor rights are not mutually exclusive.  As respects collection of a delinquent debt, a consumer has the right to be treated respectfully. A consumer has the right to obtain complete and accurate information on the debt. Consumer rights are protected by the Fair Debt Collections Practices Act, or FDCPA a law put in place to shield consumers from abusive and deceptive practices by third party debt collection agencies.

The FDCPA is a very good law.

Consumers need to be protected from unprofessional collection agencies. You need only google “collection agency scam” to find a host of horror stories. Some of the news reported is not actually done by collection agencies, but by people pretending to be collection agencies to scam people by pretending to be the IRS, and so forth. Nevertheless, there are bad players among debt collectors – just as there are bad players in every industry. There are also many reputable collection agencies working hard to return money back to business owners and keep the economy moving.

Creditors also have rights, including the right to be paid for the work they do.

None of my clients want to work for free. Would you want to work and not be paid? Creditors have a responsibility to protect their right to be paid by communicating to their credit customers upfront the terms and conditions of their payment policy.

An effective debt collector stands at the intersection of consumer rights and creditor rights.

They are an advocate for their client – the creditor. The goal is and always should be to get the creditor paid. However, if consumer rights are protected, and the debt collector can clearly and professionally communicate with the consumer, chances of success are high.

Consumer debt collectors must be professional yet persistent. There really are instances where people have suffered a life even that leave them unable to pay. There are also instances when people do not take their responsibility to pay for services seriously. A good debt collector knows how to tell the difference.

So when does the process break down?

It breaks down when one or more of the parties neglect the rights of the other party. If a debt collector is abusive, chances are a consumer will take legal action. When a consumer does not respond to numerous requests for payment, then chances are the debt collection will progress and could impact the consumer’s credit rating or put the assets of the consumer in jeopardy. If a creditor is careless with their credit practices, and if they do not work in tandem with their collection agency, it will become difficult to get the best results.

Respect, professionalism and most importantly, communication are essential for all parties. Collection agencies must adhere to the law, and work with consumers to set up payment arrangements. Consumers should realize that when a debt is referred for outside collection, it is time to do something – even if that something is letting the agency know they cannot or will not pay. Creditors should trust and support their collection agencies, and give them all the tools they need to succeed.

Maine Collection Agency: What They Can and Cannot Do

Posted by Marilyn Miller on March 15, 2019  /   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.

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