Collection Agency

Discussion in 'General Industry Discussions' started by Breezmeister, Dec 11, 2007.

  1. Breezmeister

    Breezmeister LawnSite Bronze Member
    Male, from South Jersey
    Posts: 1,571

    I see alot of rants about customers that are late or don't pay and I was just wondering if any of you use collection agencies and what you can and can not do with them ?
     
  2. landscaper22

    landscaper22 LawnSite Senior Member
    Posts: 829

    I never have used an agency. Never got to that point. I have a family member that works for a lawyer. She has told me that if I have a problem to contact her first. She will try to scare them into paying me. I have only had to call her once, but before she had a chance to do anything for me, the guy paid. I would use an collections agency as a last resort, but it can pay off for you. I would take them to small claims court before considering collections. You can get all of your money plus court fees if you win.
     
  3. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Posts: 1,776

    Read up on your state laws for mechanic's liens. In Ohio, we can put a lien on any property we enhance or maintain if the bill is not paid. It's very simple and makes a drastic point as a last case scenario. If you want to use a collection agency they will charge you around 25% to collect. You could also use Pre-Paid Legal, who will send a letter or make a phone call on your behalf to collect unpaid debts. That is just one of their services (the one I seem to use most) and it's only $34.95 mo.

    Options are out there without having to pay a collection agency. Your asset protection expenses should not have to bear that weight. IMO.
     
  4. mx315

    mx315 LawnSite Senior Member
    Posts: 394

    I just had to threaten to use collections on a doctor client of ours. She didn't want to pay for one of the 5 properties we did for her and her husband b/c her lawyer to her that if she paid us anything that it would show she was responsible for the bills or some BS. I told her that her husband had paid all his bills and she was living in the house... so as far as I was concerned it was her bill. I told her I didn't care what their issues were I wanted my money and if I didn't get it in 7 days then I would turn it over to www.olddebts.com and ruin her credit. I had my money in 2 days. The threat is all it takes alot of the time... especially if they have good credit and don't want to ruin it.
     
  5. Big Lebowski

    Big Lebowski LawnSite Member
    Posts: 124

    I have used collection agencies in the past. The most important thing to remember here is that if somebody has no intention of paying, you will not get paid regardless of what you might think your brilliant collection idea is. And stopping by their house everyday can be construed as harassment and they could get a restraining order against you. That's the sort of story that the newspaper like to print.

    However having said that, there can be some satisfaction in knowing that somebody is calling their house daily if not several times per day, whether you get paid or not. But if they understand their rights, they can tell the CA to to stop calling and then the contact must be via mail only. It's easy to throw out a letter.

    When going after somebody for money, look at it as "maybe" you might get paid. I know this might sound like it's easier said than done but honestly, I am owed literately thousands upon thousands of dollars from my other business (i don't wish to discuss it here, right now, maybe later) and the only way to sleep at night is to understand you will still be in business, you will still get up and live on without their money. It will only ruin your day if you focus on it. Move on. Trust me on this.

    But anyway. There are collection agencies that charge different amounts for their service. Some charging up to 50% of the total. Some folks might feel that it is better than nothing. Well regardless of whatever agreement you and the CA come up with, the way to make sure you get your portion is to make sure your contract says that you can collect interest on unpaid balances (check your state as they have limits - most are 24% APR, so thats 2% each month) and make sure it states that they are responsible for all court, collection and attorney fees. That way if your CA charges 25%, then you add that to the balance before turning it over to them. All CA's don't get paid unless the bill is paid so there is motivation for them to get the bill paid. There are also CA's that make house calls. These guys are pretty effective. I never used one but you can imagine how that works out, a guy at your door asking for $50? That would catch most off guard enough they would pay right there.

    Some attorneys will charge $35+ for each letter they write. I don't see the value unless they are writing them to notify them of the fact you are filing a claim against them. Even then, an attorney that has your interest in mind will tell you to try small claims unless they owe you more than $4-$5k or so.

    Here's what can happen when you file a claim. 1. They could not show up and you win by default and you would not have to argue your case - this would most likely happen if they are deadbeats and had no issue with your service. 2. You win because even if they had issue with your service, the judge agrees they owe you the money. 3. You could lose because you didn't show up or the judge ruled in their favor for whatever reason.

    Here's what happens if you win by default or by judgment. They might pay you. Again if they never intended on paying you, they will not pay you. Remember that all the hearing does is confirms or agrees they owe you money. Because this is a civil case, they are not going to jail if they don't pay you. So the next move if they don't pay? You can now file a judgment against them. Don't be fooled by this either, this just means the court has agreed that they do in fact owe you. If you win the judgment, then you can file liens against personal property such as homes, cars etc. but that is only if a judge agrees. Some states may have their own rules like Ohio mentioned above, the process might only require you to only file some forms.

    Here is what a judgment can do for you. The court will file the judgment but better yet it becomes a part of public records. It will stay on their credit report for up to 10 years. That in it self can be much gratification for not paying you. It does for me anyway.

    Here's some truths/myths about collection etc. You don't need anything more than an address and a name to use collections, but that is not enough to ruin somebody's credit. You'll need a lot more information than that. The two big ones being date of birth and social security number. You could even get away with just the SS number but at what point in lawn care will you ever get this info? You can say you'll ruin their credit but seriously, chances are they will either know better, be stupid enough to believe you or they wont care either way. You must be a paying member of the credit reporting agencies to report somebody for failure to pay. Such as a collection agency.
     

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