Debt Collection FAQ (Frequently Asked/Answered Questions) – Part Ten

Posted by Marilyn Miller on August 26, 2019  /   Posted in Uncategorized
How long will it take to collect the money owed to me?

Customers often ask me for a timeline for the collection of monies due them. The honest answer is that it will take the time it takes. When we receive a new file, we begin the process by sending them a notification of debt and by attempting to reach them by telephone. Until that point, the process if the always the same. However there are many things we could encounter once we attempt contact:

  • The debtor could pay immediately. Sometimes just the act of receiving a collection call or letter will result in a quick payment. 
  • The file could need new contact information. The first notice could be returned to us and we would then search for a new address. The phone numbers could be no longer in service, and again, we would have to research for a new phone number. 
  • The debtor could dispute the debt, and ask for validation. Even if you have not previously hear a dispute, do not be surprised if one surfaces when referred for collection. A debt collector is adept at getting at the details of the dispute, and will explain the debtor’s concern to you. More information may be needed, and the negotiation will commence.
  • The debtor could set up a payment plan. You would not get all your money at once, but you would get regular payments. 
  • Litigation may be necessary. Sometimes the only way to settle a claim is to file a lawsuit. There are many variables at play at this point. It may take time serve the lawsuit on the debtor. Some courts are busier than others, but it could take weeks or months to get a hearing date. The debtor, now a defendant, could obtain a continuance which would delay the hearing. If you successfully win your case, you would obtain a judgment, but since the court does not collect the money for you, you still may have to employ other methods, like liens to get paid.

The important thing is that provide all information the collection agency will need to help you. Also, do not delay sending delinquent customers to a debt collector. You are not doing yourself any favors by holding onto a file for more than 90 days. In fact, you could be hurting your chances. 


Debt Collection FAQ (Frequently Asked/Answered Questions) – Part Nine

Posted by Marilyn Miller on August 21, 2019  /   Posted in Uncategorized
Does reporting a bad debt to a credit bureau help get the debt paid?

Credit reporting is definitely a tool that collection agencies use. There are times when people decide to clean up their credit because they are buying a home, or just want to be more financially responsible. At those times, consumers will pay the debts that are on their credit reports.

So does credit reporting actually help collect a debt? It can motivate your some people to pay the bill so as to avoid the impact to their credit score. Also, there is a chance that even if your customer does not care about their credit score today, they will at some point in the future. Federal and state laws vary on how long debts can be reported, but the “future” could be years from now though. How long do you want to wait? What is your collection agency doing in the meantime?

When a collection agency reports a debt, it makes their customers, the original creditors feel as if the delinquent customer has not “gotten away” with not paying their debt. The only problem with that thinking is that the delinquent customer already has already gotten away with it!  Credit reporting used for revenge is just silly.  Focus not on getting even, but on recovery – on getting paid.

Which brings me to the downside of credit bureau reporting…

Without even taking into account the security risks of data breach, credit reporting does have its downsides, mostly because people overestimate its effect on debt collection. Credit bueau reporting is only one tool a collection agency can use to collect a debt. My opinion is that many collection agencies overuse it, Ask your collection agency what they will do to recover for you. If credit bureau reporting is the first thing they tell you, it likely means that is pretty much all they are doing. Perhaps they are sending a letter and making a few calls, but after a month or so, the debt is parked on your customer’s credit report and nothing new happens.

In my experience, most people sent to collections are not primarily concerned with their credit scores. It may be an issue, but it is not the most important issue. The most important issue, the one we hear again and again is just not having the ability to pay. Therefore it makes sense to work with people and get them into affordable payment plans, rather than punish them for something that may be totally out of their control. Even for those customers that intentionally stiff you, your focus should not be on getting even with them. Your goal, and the goal of your collection agency should be to recover as much money as possible. It can be done without credit reporting. I know – I have been doing it for 14 years.

As of July 1, 2017, credit reporting agencies were also required to remove many debts that did not have key identifying information on such as social security number and date of birth. Going forward, if do not have complete information on customers, the credit bureaus may be unable to accept reportings. The impact of medical debt on a credit score has also been minimized So an active plan for recovery becomes even more important.

Also, a new law protects current military and veterans from the reporting of certain medical debts. 

Credit reporting and debt collection, therefore, are two distinct things. One is a tool that may or may not work, and the other is a process – an action word. What actions you and your collection agency take will make the difference in getting you paid.

Debt Collection FAQ (Frequently Asked/Answered Questions) – Part Eight

Posted by Marilyn Miller on August 19, 2019  /   Posted in Uncategorized
Is Small Claims Court a good way to collect money owed to me?

 Small Claims Courts were established as a way to allow small business owners and individuals a way to take cases to court themselves, and avoid the expense of hiring an attorney. The process is meant to be simplified, and claims are limited to a certain dollar threshold, which varies by state.

Debt collection using the court system can be effective in certain cases. Other times, it can be a waste of your time and money.

Here are some considerations:

The court does not collect the money for you.

If you take a case to small claims court and win your case, you will be awarded a judgment. A judgment is a court order confirming the amount owed to you. It usually lists the amount awarded and how it is to be paid. The court only gives you the judgment, they do not collect the money – that is on you.

Once you have a judgment, you have many options available to you, such as placing a lien on a property or garnishing wages or bank account. These processes can be complex, and may cost you even more money.

Have a plan on how you are going to get paid. A large percentage of small claims cases go unpaid, because creditors just do not have the time to pursue them unless the judgment debtor pays voluntarily.

Make sure you understand the process and follow it carefully.

Even though the Small Claims process is simplified, each state has procedures that you must follow to be successful. For example, in order to have your case considered, your debtor must receive notice of the lawsuit. This notice, called service of suit, is essential. Your case will be dismissed if you do have it served properly. Some states require you to hire a process server, while others allow you to serve the suit by certified mail. Before you start, check online or call the court and ask a clerk for instructions. Most states have some sort of guide that will be a big help.

Make sure Small Claims actions make sense, economically

Once you have basic information from the court, take a look at the costs involved. The costs could include fees for filing the suit, the cost of hiring a process server, and then the costs involved after you receive a judgment to file liens, etc.  Make sure the math makes sense.

Consider alternatives to do-it-yourself Small Claims

Would it better to forward your file to a collection agency to see if they can get your wayward customer on a payment plan?  If the only reason you want to use the Small Claims Court is to save on a collection agency fee, consider the investment of your time. Do you have the time to spend a day in court?

Also if you have customers sign a contract that allows you to recover any costs of collection, your collection agency can recover them, as long as your state allows it.

So yes, Small Claims Court can be an effective tool in collecting money owed to you. It is not for every case.  Pick your battles. Do your homework, and if you use the courts correctly, you are bound to succeed. 







Debt Collection FAQ (Frequently Asked/Answered Questions) – Part Seven

Posted by Marilyn Miller on August 16, 2019  /   Posted in Uncategorized
What information does a debt collection agency need to collect a debt?

I am often asked by new customers what type of information I need. The short answer is, “everything you’ve got”.  

More specifically:

  • Detailed invoice detailing all charges and payments that documents the amount you want the debt collection agency to pursue. A simple statement with just a total is not enough. Detailed invoices help the debt collector discuss the debt in question. In addition, a detailed invoice will be needed if a consumer disputes the debt. By law, if a consumer disputes a debt and asks for verification, the debt collector must send it within 30 days. 
  • Contract or any agreements signed by debtor agreeing to pay. Send a signed estimate or work order, if you have one. 
  • Any and all information contact information. Even if the information is no longer valid, your debt collection agency can research and find new information.
  • Any correspondence, especially regarding a dispute.
  • Any other information that will assist in the collection of the debt, such a copy of a bad check.
  • Also, if there are specific circumstances regarding the origin of the debt, detail them. For example, if the bill is the result of an emergency call in the middle of the night, that is significant. 

The better the information you send the debt collection agency, the greater their chances of success.

If you learn new information, pass it along to a debt collector. A debtor obtaining a new job or moving to a new state could help the agency determine a more effective strategy to get you paid.

Debt Collection FAQ (Frequently Asked/Answered Questions) – Part Six

Posted by Marilyn Miller on August 14, 2019  /   Posted in Uncategorized
What is the FDCPA and does it apply to creditors?

The FDCPA, or Fair Debt Collection Practices Act is a federal law that governs the behavior of third-party debt collectors attempting to collect consumer debts.  It does not apply to original creditors. The FDCPA details abusive, misleading and unfair practices, gives guidelines for debt collector communication. It assigns civil penalties for violations of the law. There are also state versions of the law, based on the federal model.


The FDCPA is a very good law. Consumers need to be protected from unprofessional collection agencies. Just google “collection agency scam” and you will find a host of horror stories. Some of the news reported is not done by collection agencies, but people trying to scam seniors pretending to be the IRS, and so forth. Nevertheless, there are bad collection agencies out there – 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 flowing.

Collection agencies have made significant changes to their hiring and training practices to comply with the FDCPA. These changes have helped consumers. It is my opinion, however that the law is not always used for the best of purposes. Let me give you an example.

Years ago, we received service of an FDCPA lawsuit. The plaintiff was an inmate in federal prison in Pennsylvania, alleging violations of the FDCPA for debts from various credit cards when the plaintiff lived in Massachusetts. Now, I have never worked or lived in either Pennsylvania or Massachusetts and I have never collected consumer credit card debt. The plaintiff’s name was not in our database. So naturally, I knew the suit was baseless, but since the suit had been filed, I had to respond. Several other local agencies were also named in the suit, and I called two of them. I was horrified to learn that even though, like me, they had never attempted to contact the plaintiff, and knew the suit to be a scam, they had decided to pay the amount demanded – $2,500.

Why? Simple economics. You see, when a business is sued, the business owners cannot represent the business. They must hire an attorney to represent them in court. The cost of hiring an attorney might well exceed the demand amount. They considered the payment a cost of doing business. Well – not me – I never pay ransom!

I contacted the prison authorities who referred me to the FBI. As luck would have it, I had a relative who was a Pennsylvania-admitted attorney, so I was able to get a letter done for free, but I would have paid an attorney, just to make sure the scam was exposed and ended.

The inmate lawsuit is an extreme example, but there are also examples of collection agencies being sued for minor violations such as one word being left out of place in a letter. Some court decisions have been totally contradictory – such as one court ruled that agencies must leave certain language in a voicemail and another court finding that same language to be disclosure of the debt to the third party, which is prohibited by the FDCPA. In some cases, the attorney gets a large award for fees, while the consumer gets only a few thousand. Still others might use the FDCPA to get out of paying the debt – not at all what it was intended to do!

Penalizing agencies for hyper-technical violations takes time and energy away from prosecuting the bad players. Consumer collection agencies walk the “damned if we do, damned if we don’t” tightrope.  Just as unscrupulous agencies ruin it for the good ones, bad litigants ruin it for those who need protection.  Many agencies no longer collect consumer debt. Third party agencies return over 50 billion dollars back into the economy every year. We know you love to hate us, but if we don’t get businesses paid, then businesses cannot grow. Prices go up. Employees are laid off. No one wins!

However, just because the FDCPA does not apply to original creditors does not mean they are free to be abusive or threatening, as much as they would like to be. It is always best to keep it professional, and get expert advice when needed. 

Debt Collection FAQ (Frequently Asked/Answered Questions) – Part Five

Posted by Marilyn Miller on August 12, 2019  /   Posted in Uncategorized
“How does the debt collection process work?”

Many of my clients have never hired a collection agency before. They are curious to learn how the process works. To me, this question is a good sign, because it shows that I have a customer that wants to partner with me for optimal results.

The debt collection process is at the same time simple and complex.

Your customers will receive an initial notification of debt, which will include basic information on the debt and how to pay it. For debts owed by consumers, the letter will advise consumers’  rights if they wish to dispute the debt. Telephonic contact usually works in tandem with written notice.  So far, the process is simple, and some people pay quickly after being sent to collection. If they do not, the process becomes more complex.

Debt collection involves a good deal of negotiation and documentation. If we convince someone to enter into a payment plan, we always document that plan. We manage those payment plans, and follow up on missed payments.

Often, we have to research to find new contact information on debtors to find a new phone number or address. This research, called “skip tracing” is key to successful debt collection. Research is also used to determine if a debtor has assets to pay the bill, if they have other pending litigation and to find other information that will drive the strategy to get the debt paid.

Reporting to credit bureaus could be another part of the debt collection process, but it is certainly not the most important part.  A consistent and persistent effort that combines different actions is what works.

You can and should be part of the debt collection process, even after you have submitted the accounts to your agency. You should stop sending statements and direct any inquiries to the agency. If you find out new information on the debtor, make sure to pass it on to the agency.



Debt Collection FAQ (Frequently Asked/Answered Questions) – Part Four

Posted by Marilyn Miller on August 05, 2019  /   Posted in Uncategorized
Why did they pay you and not me?

The debt collection process involves a good deal of focus and persistence.

Debt collection is what I do for a living. I have the luxury of being able to focus on it. Business owners have no such luxury, as they wear many hats.










It is all too easy to get caught up in day-to-day operations or customer service, and neglect aging accounts receivable.

Many small business owners have designed an in-house collection process and use it well. They call delinquent customers and send them a well-worded collection letter.  Their efforts produce results, but since they have other things to do, they can only do so much.

Successful debt collection also involves escalation. Again, many business owners use an escalating process involving senior management before sending a file to a collection agency. And again, it works sometimes.

The key is to continue the escalation by hiring a collection agency. A collection agency can move the process to the next level. If your customer cares about impact to their credit rating, they might just pay when contacted by a collection agency. They may pay the bill after receiving multiple collection calls, just to make us go away!

Sometimes, we use our best stuff, and still cannot get someone to pay. In those cases, I may make a referral to an attorney for litigation. And sometimes, they pay when they get served by the lawsuit, causing me to ask, “Why did they pay my lawyer and not me“?

The answer, of course, is escalation. Ask yourself, “What will motivate this person to pay?” and DO THAT THING!







Debt Collection FAQ: Frequently Asked/Answered Questions – Part Three

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

Debt collection is much more effective when the underlying debt is based on a contractual agreement. Contracts do not have to complex. A simple statement of your payment policies could be enough. A contract needs to be in writing, and agreed to by customer, in writing, before the transaction.

So when I am asked..

“Can I add collection costs onto the debt?”

…the first thing I do is look for a signed customer contract. Your ability to add costs onto a debt will varies depending which state you live in, but without a contract, your chances to add or recoup them are limited, if not non-existent. 

Some small business owners believe that asking a new customer to sign a payment agreement/contract is starting a new relationship on a “negative” note. Not at all! In fact, communicating your payment expectations is a very positive start. 

As I mentioned, a contract does not always have to be a complex and lengthy document. Even an email with the basics can work in some cases. The important thing is that the customer acknowledges their agreement, because contracts must be bilateral, that is, agreed to by both parties. 

If you want to pass on any collection costs, your contract should mention it, something like, 

“In the event of non-payment, you agree to pay all costs of collection.”

Once again, state laws vary regarding collection costs, but if your customer agrees to them, you are off to a good start.

If you believe that your oral agreement covers you, or if you are “too busy” or unwilling to get customers to agree to a contract, you may suffer the consequences later. You can design a process to streamline the contractual process. It can and will help maximize your collection efforts, and reduce your over all cost of collection.

Try it!


Debt Collection FAQ (Frequently Asked/Answered Questions): Part Two

Posted by Marilyn Miller on July 24, 2019  /   Posted in Uncategorized

Debt collection can appear to be a difficult and frustrating process. While there are certainly difficult instances, the process itself is actually quite simple. It simply involves commitment to a simple consistent process.

Most of our day is spent attempting to contact debtors on behalf of our clients, in order to convince them to pay their bill, or to enter into a payment plan. We also research files for new contact information, or to find assets. The research aspect of our business is commonly called “skip tracing“.

Too often, I am asked by my clients to exact revenge on non-paying customers by “harassing” them, and “ruining their credit”. We can and will do neither.

We are not in the revenge business. We are in the recovery business. Harassing a customer is a violation of the FDCPA, a federal law which protects consumers from abusive debt collection practices. And as respects “ruining” anyone’s credit, reporting one debt is hardly going to do that.

British poet George Herbert said, “Living well is the best revenge”. When it comes to debt collection, getting paid is the best revenge.

Keep your focus on recovery. You have already suffered a loss when a customer does not pay you. I often hear from my clients, “I do not want them to get away with not paying me”. The sad truth is that if you are calling me, they already have gotten away with it, and we are in recovery mode. We are going to work hard to recover as much money as we can, but you are starting with zero. In this case, something is better than nothing. 

I get it. I know it stinks when you are not paid. But if you focus on the anger instead of on working with your collection agency to recover as much as you can, you are not going to make progress.


Debt Collection: FAQ (Frequently Asked/Answered Questions) – Part One

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

Debt collection is my business. I help small business owners when they do not get paid. I like to think that I also assist my customers with their credit practices. Truth be told, the better job they do, the easier my job can be.

Still, I continue to hear the same questions about debt collection and small business credit practices. So, I thought I would list them one more time.

Question: Can’t you just lien their home?

Answer: A lien is a record placed against a piece of property that can prohibit the sale of said property until the lien is released. In most cases, it means that the underlying debt gets paid. So it would make sense to put a lien on someone’s home to make sure you get paid, right?

No, wrong. 

You cannot file a lien against a piece of property unless you have a legal right to do so. 

Most of time when my clients ask this question, they are not referring to a mechanics lien, which can be placed on a property when the contractor does not get paid. They are only valid for a limited time, usually 90-120 days, depending on the state. To keep this type of lien in place, you would file a court action and obtain a court judgment. And again, this type of lien applies only to contracting work – repair or improvements to fixed property.

A judgment is a decision by a judge in a court of law. If you obtain a judgment in your favorite, then you have the right to file a judgment lien against a piece of real estate. The lien stays on the property until you release it. So, sit back and relax and one of these days, you will get a phone call from the property owner (your debtor), who will pay you in full in exchange for a release of lien, right?

Well, probably.

Before you file a court decision, do some research. Make sure that the person you are suing actually owns the property. Determine, as best as you can, if there is enough equity, or value after mortgage or any other liens, to pay your debt.  Make certain that the property is not in foreclosure. 

So while judgment liens can be a great way to secure and collect money owed to you, you have to make sure you use them in the right way, and in the right circumstances. 



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