Senior Debt Collection Tips

Let’s start with two wonderful quotes:  “A bulldog can whip a skunk, but sometimes it’s not worth it.” – J. Nowell or “Creditors have better memories than debtors.” – Ben Franklin.  When clients hire me to collect a debt, these humorous quotes often come to mind, but for most business owners and senior adults who rely upon steady income to pay bills, debt collection is terribly important.  Because the process of collecting a debt can be incredibly exhausting, seniors should take great care to use efficient methods.  These tips are designed to help seniors understand the process of debt collection and how best to make good decisions going forward.

Be Precise – Be Productive.  You should always incorporate good accounting practices in everything you do when dealing with debtors.  Accurate and detailed records help you identify and address delinquent accounts and prove the money owed if audited.  In today’s litigious society, your customers will demand to know exactly where their account stands.  If your affairs are in order, you will be ready to provide itemized invoices or account balances that recognize all credits and debits.  Thereafter, do not ignore past due accounts.  Customers who are not called to action, rarely accrue money to pay debts.  Your debt will become less important than their cell phone bill or cable bill.  The longer your debt remains unpaid the less likely you are to collect.

Know the Rules for Debt Collection – Many of Your Debtors Already Do.  The Fair Debt Collection Practices Act (FDCPA) is the authority that regulates collection agents, law firms and other third party debt collectors. This act and many other litigation tools are published regularly on the internet and perceptive debtors with time on their hands seek out these authorities if they are struggling to pay their obligations or if they intend to make your collection efforts difficult.  Violations of the act such as excessive phone calls, abusive language, and threats of violence, harm or arrest may cost you far more than loss of the original debt.  When first contacting consumers, debt collectors must inform debtors of their rights to dispute the debt.  This “mini-Miranda” or disclosure of information appears in every demand letter mailed by my firm.  The information can be exchanged over the phone but it must be sent to consumers in written form within five days of the first telephone contact.

Prepare Well For the Initial Communication.  Now that you know the rules regarding the FDCPA, a good creditor always reviews what information they have at their disposal before making contact with any debtor.  Your goal in this initial communication is to provide notice that the account is delinquent along with the total amount owed, the number of days delinquent, and the original due date and any late fees or interest owed.  If you did not cause your debtor to complete a credit application, I encourage you to include that important step going forward as the application normally provides valuable information such as employer contact information and bank account numbers that can both assist with the initial communication as well as expedite the post-judgment collection process.

Maintain Control When Contacting Debtors.  Because the first step in any collection process is the initial contact with the debtor, make certain you are speaking or communicating with the correct person at all times and do not discuss the account with others.  Emotions often run high during one-on-one collection efforts.  Maintain control of all conversations and keep the discussions focused on the debt and repayment schedule.  Debtors often distract creditors, either intentionally or unintentionally, with personal histories and excuses, but remember that collection of the debt is your primary goal and when possible secure specific payment terms and deadlines for action.

Consider Accepting Installments.  Let’s face it, some debtors simply do not have the funds to make a lump sum payment of your debt.  When you are satisfied they are indeed without sufficient funds, seek to establish a reasonable installment payment plan that both of you can live with.  In doing so, include provisions addressing interest, late penalties, and litigation costs if possible.  Thereafter, if the agreement fails and your debtor refuses to pay, you have the ability to collect even more of your expenses from the account.  Be sure to document any agreement you make in writing and have the debtor (and his/her spouse if married) sign to acknowledge they intend to make payments and agree to any additional terms.  Any reputable attorney can help review your agreement prior to signing.