Anyone here send anyone to collections?

[fuzzybabybunny]

I have a client who is overdue on her $500 invoice by 2 months. I've sent 6+ reminder emails and left 3 voice messages. I finally got a hold of her yesterday on the phone and she didn't sound very apologetic. She made some excuse of "her phone fell in the toilet 2 weeks ago" but this has been going on for 2 months.

How does the collection process work? I'm only going to see a small fraction of that $500, huh? I don't have a contract between her and I, but I definitely have email logs scheduling our service, proof of services rendered, and all those reminder emails and phone logs.

 

[xanis]

I would think that you'd have to take her to small claims and get a judgement.

 

[SandEagle]

why didn't you collect the money first? don't you accept credit cards?

 

[fuzzybabybunny]

I would think that you'd have to take her to small claims and get a judgement.

What I'd like to know is is this worth it for $500? The personal aspect doesn't worry me a bit. She's a small time client and I don't care if I lose her and burn bridges. But if it's going to take me $400 + countless hours to get this $500 by going through the court and/or collection process then it doesn't make business sense, and I should put it all in Bad Debt Expense.

 

[MagnusTheBrewer]

FBB, it's a lot like dealing with bail bondsmen. You don't have to go to court, you sell the debt for some percentage of the dollar. The percentage varies according to the size of the debt and the apparent ability of the debtor to pay.

 

[xanis]

What I'd like to know is is this worth it for $500? The personal aspect doesn't worry me a bit. She's a small time client and I don't care if I lose her and burn bridges. But if it's going to take me $400 + countless hours to get this $500 by going through the court and/or collection process then it doesn't make business sense, and I should put it all in Bad Debt Expense.

Whether or not it's worth your time is something only you can decide. I freelance as well, and *personally* $500 wouldn't be worth the hassle. I'd probably only go after someone for $1,500+.

 

[fuzzybabybunny]

why didn't you collect the money first? don't you accept credit cards?

I absolutely do, but there are a number of reasons why collecting money upfront is a bit difficult.

1. Clients either don't like to use cards, or they don't have cards to use.

2. I don't have a system in place that allows me to funnel people into paying up front. It's all manual at this point, and it's too much for me to handle in addition to my other day to day activities.

3. Sometimes these are so last minute that we go and shoot before collecting payment.

 

[highland145]

Did she say when she was going to pay when you did talk with her?

$80 for a summons and complaint here at the local magistrate (small claims). Check your local county public court index to see if others have filed against her. Also, look for judgements. Those will give you an indication that she's a P.O.S. and serious about it. If she has had a lot, you're wasting your time. None or very few, send a certified letter giving her 20 days to pay or "legal action" will be taken. If you threaten legal then you must follow through if she doesn't pay. If she still doesn't pay, in S.C., you get a judgement which isn't worth a crap if she doesn't have any real property. We don't have garnishments so it's basically a scare tactic.

This right here dictates how I handle this type of customer.

I finally got a hold of her yesterday on the phone and she didn't sound very apologetic.

The easiest thing to do is stay on her ass, calls/in person. If she says she'll pay today by 5:00 and doesn't, tomorrow at 8:00am I'd be calling her. Twice a day, every day. She says she needs another month, tell her that's not good enough...you need to be paid today for services rendered 2 months ago. Tell her to borrow it, you need your $$ and have bills to pay. Her dog died, her kid is sick, she's got a zit.....you're sorry but you need to be paid for services rendered 2 months ago. Don't say/email anything that you wouldn't want repeated in court. Don't talk to 3rd parties about her bill. Except us, of course.

February marked my 25th year collecting the $$ I've lent out. I've heard every excuse. Last week, a non-paying customer told the magistrate she didn't pay because Obama didn't give her a pay raise.

 

[manimal]

Is this woman a sole prop or is she incorporated in any way?


Did you she give you a tax id?

 

[manimal]

Did she say when she was going to pay when you did talk with her?

$80 for a summons and complaint here at the local magistrate (small claims). Check your local county public court index to see if others have filed against her. Also, look for judgements. Those will give you an indication that she's a P.O.S. and serious about it. If she has had a lot, you're wasting your time. None or very few, send a certified letter giving her 20 days to pay or "legal action" will be taken. If you threaten legal then you must follow through if she doesn't pay. If she still doesn't pay, in S.C., you get a judgement which isn't worth a crap if she doesn't have any real property. We don't have garnishments so it's basically a scare tactic.

This right here dictates how I handle this type of customer.
The easiest thing to do is stay on her ass, calls/in person. If she says she'll pay today by 5:00 and doesn't, tomorrow at 8:00am I'd be calling her. Twice a day, every day. She says she needs another month, tell her that's not good enough...you need to be paid today for services rendered 2 months ago. Tell her to borrow it, you need your $$ and have bills to pay. Her dog died, her kid is sick, she's got a zit.....you're sorry but you need to be paid for services rendered 2 months ago. Don't say/email anything that you wouldn't want repeated in court. Don't talk to 3rd parties about her bill. Except us, of course.

February marked my 25th year collecting the $$ I've lent out. I've heard every excuse. Last week, a non-paying customer told the magistrate she didn't pay because Obama didn't give her a pay raise.

How many calls can one make in a situation like this legally?
Can hounding a customer get the business owner in any trouble?

 

[EagleKeeper]

If you have paperwork stating that a price for services, something showing services were rendered and a documented trail of attempt to collect then head over to small claims court
Pay the filing and serving fees.

A date will be set and she will be served notice.
Both sides appear before the judge and a decision is made.
If in your favor - all your court costs get added to the original IOU.

After that, you still have to figure out a way to actually collect.
But you have the authority to get her salary garnished from her employer.

Best is to let her know that she has 2-3 weeks to pay up or you are going to take her to court. As stated above, use a certified letter.
In that time frame, you collect and prepare all the documents that you will need; the court clerk will advise you of what is needed.

Even if she then pays you in full after being served; you are owed by her all the other fees for filing and serving.

In other words; you still go to court unless you are fully compensated.

 

[highland145]

How many calls can one make in a situation like this legally?
Can hounding a customer get the business owner in any trouble?

Here, the laws says that I can't make "multiple calls in a short period of time." Twice a day is the accepted practice in my industry. Once an hour isn't. If I've spoken with them and have an arrangement, I don't call again until they fail to keep their end.


Edit: EK, unfortunately we don't have garnishment in S.C. And yes, if you have to sue her and she doesn't pay in full, still go to court.

 

[manimal]

Here, the laws says that I can't make "multiple calls in a short period of time." Twice a day is the accepted practice in my industry. Once an hour isn't. If I've spoken with them and have an arrangement, I don't call again until they fail to keep their end.

Thanks for the response Highland145!


I have a current deadbeat who keeps giving me dates he will pay and has thrown his mother and his girlfriend under the buy by giving me their names. The guy keeps giving me by dates and last week promised he sent me a certified letter. This is in my automotive business. He did sign my paperwork which states failure to pay releases the vehicle for a rapid lien. Normally I know what to do if I still have the car but the guy came and took it overnight with another set of keys.

 

[highland145]

Thanks for the response Highland145!


I have a current deadbeat who keeps giving me dates he will pay and has thrown his mother and his girlfriend under the buy by giving me their names. The guy keeps giving me by dates and last week promised he sent me a certified letter. This is in my automotive business. He did sign my paperwork which states failure to pay releases the vehicle for a rapid lien. Normally I know what to do if I still have the car but the guy came and took it overnight with another set of keys.

I hate pieces of garbage. Police matter now? I'd call it in to cover your butt. It might have been stolen.:whiste:



Edit: Can you still file for the title and then repo it from him?

 

[manimal]

I hate pieces of garbage. Police matter now? I'd call it in to cover your butt. It might have been stolen.:whiste:



Edit: Can you still file for the title and then repo it from him?

Really good question!

I am gonna make a few calls. I am trying to resist the temptation of just heading over and picking up the car with this set of keys. Just dont want to do anything stupid.

 

[SpatiallyAware]

When dealing with collections you have to 'sell' them the debt, usually for pennies on the dollar. So they would give you about $15, then pursue the $500.


Probably not worth it... $500 business loss isn't bad at all, handle it via taxes.

 

[highland145]

When dealing with collections you have to 'sell' them the debt, usually for pennies on the dollar. So they would give you about $15, then pursue the $500.


Probably not worth it... $500 business loss isn't bad at all, handle it via taxes.

Might not be able to sell it because he doesn't have a contract.

As in, taking it as a loss? I'd rather have my $500 and pay tax on that than have zero and pay no tax.

EK will know but depending on his business he might not be able to. My bro the plumber can take off parts but not his labor on un paid bills.

 

[ViviTheMage]

$500, I just mark it up as a loss ... collections can be a PITA, even for a business!

 

[roguerower]

Maybe this will teach you to start writing up contracts for the future. All you need to do is write a standard contract with exhibits and fill the exhibits as it pertains to the customer.

Back OT, I'd go with EK's advice.

 

[Uppsala9496]

In my line of work, I have constantly see law firms file suits for fees unpaid. I advise them not to do so because said client is going to turn around and file a suit against them for malpractice.
For what it is worth, insurance companies are reluctant to insure entities with a history of filing suits for unpaid fees. The biggest reason is counter suits.

 

[EagleKeeper]

You can not charge off labor of yours as a bad debt.

It has to be expenses that you occurred.

EX:
IF the bill if for $500 and you spent $100 on supplies and $20 on travel, you can only write off the $120. Your $380 is not a loss because you never had it in the first place.

 

[EagleKeeper]

Really good question!

I am gonna make a few calls. I am trying to resist the temptation of just heading over and picking up the car with this set of keys. Just dont want to do anything stupid.

File the lien and then pick up the vehicle. As soon as you have the vehicle in your possession (keys in the ignition or hooked up to a truck) call local PD and advise them that you have done a repo. That stops a stolen report from being filed.

Place the vehicle then in a secure facility. After some period of time (check local laws), you can then file for title. If there is a primary lender on the title - you will have to coordinate with them. Advise the lender that you have possession of the vehicle.


Information above is based on experiences with my mechanic/shop owner in Vegas and also my daughter who ran a repo shop there.

Fun telling people that my daughter is a car thief. You should see their double takes!

 

[Saint Nick]

Just break her legs

 

[God Mode]

Sell the debt to the mafia. People that don't take their debt seriously need a wakeup call.

 

[alkemyst]

How many calls can one make in a situation like this legally?
Can hounding a customer get the business owner in any trouble?

You can call until they tell you not too.

If you are calling them daily/hourly that will probably be harassment.

You tend to do this in 30 day cycles.

As far as selling to collections, most don't deal in onesy-twosy stuff; this is what small claims court is for.