More FAQs

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Q. HOW SOON CAN YOU COLLECT FOR ME? 

A. Some cases are collected within the first 30 days and others are never collected. In general, most successful collections become apparent soon after our collectors begin dunning the debtor. Other times, the debtor pays immediately after the lawsuit is served, and generally we know if the collection will be easy, even if contested, within the first 120 days. While sometimes it is possible to delay in court for months to years, most collection cases are easy to win and harder to collect than regular court cases. That means that, even in a contested case, we can have a good projection for you rapidly. 

Q. WILL YOU COMPROMISE MY CLAIM? 

A. Only you can approve a compromise! We will do our best to get all of your money and we won't compromise your claim without your consent. If we get any written offer, we will communicate it to you for your decision. If we get any legitimate oral offer, we will also communicate it to you for your decision. Ultimately any settlement or compromise will be your decision. 

Q. DO YOU TAKE PAYMENTS? 

A. We always demand full immediate payment. Very frequently the threat of litigation or the filing of proceedings with the court gets the debtor to pay all of the debt immediately. In some circumstances, payments may be the only way to collect all of your money. If it becomes apparent that a debtor must make payments, or that we can get your money faster with voluntary payments than by waiting to fight in court, we will recommend a structure for the recovery of your money in such a way that you get it or we have the immediate right to seize assets and interrupt income stream. Remember, it will be your decision to accept time payments.

Should you consider factoring or selling your debt as opposed to sending to third party collection firms?

Factoring is a financial transaction whereby a business or individual sells its account receivable (a.k.a. invoices) to a third party (e.g. collection agencies) at a discounted price, for it to be exchange into immediate money to finance the business. It is often misused synonymously with invoice discounting.  Factoring is the sale of receivables, whereas invoice discounting is borrowing where the receivable is used as collateral.  

Some major financial institutions sell their outstanding accounts both pre-charge off and post-charge off rather than have them worked in-house or sent to third part agencies or law firms. One factor is the volume of accounts and another is that they can obtain working capital upfront rather than waiting for funds to be collected over time. The advantage of this move is the invoices will be turned into money that can be use for the benefit of the company. The downside is collection agencies are known for their aggressiveness, so telephone harassment is a possibility. 

FDCPA (Fair Debt Collection Practices Act) only covers third party collections agencies not original creditors. However Federal Trade Commission has issued a Staff Opinion Letter which indicates that, even if a collection agency has purchase a debt, it is still covered under FDCPA as a third party debt collector. Hostile collections can stress out the customer and might think negatively about the company in which he/she original has debt. This might be harmful for future business opportunities.  

Aside to collections agencies, there are other debt buyers in the market. There are law firms, third party collection agencies and even individual entrepreneurs. There are a lot of individuals or companies that buy debts from individuals to large companies.

How past due should be your customer before you decide to turn over to a third party collection agency and law firm?

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The first tier of collection is with first party agencies that are subsidiaries of the company itself, these are from 1 – 30 days past due. Second tier is 31- 60 days past due, this tier, it depends upon the company if they still want the first-party to continue collecting or if they will pass it on to the third-party collections agency. 

Banks, firms or credit card companies resort to third party collections once the account reaches 90 days to 180 days delinquent. Each country and state has their own rules and regulations regarding collection agencies and their practices which are quite often very aggressive.

 

Third party collection agencies, will try to trace the customer and ensure full settlement of outstanding. If the customer is unable to settle the outstanding, the collector will ensure that a settlement plan or a discount strategy – as agreed by the company and the collection agency- is offered to the customers. 

The advantage of first party collection is there is no lag in time between an account becoming delinquent and the beginning of the collections process. Another is you have knowledge of your customers needs and practices, making the client-customer relationship positive even if the later incurred a debt, which helps down the road to keep the customer loyal to the company. Third party collections can sometimes be seen as hostile, however if your clients need your product or service to keep his or her business running smoothly, they will strive to stay on your good side. Sometimes if the customer just hears a familiar voice asking nicely for a payment is enough to keep the problem solved. 

Many times the third party agency or law firm will have settlement authority from the client to settle for far less than the original balance. Now after 180 days and the account’s still in collections it is advisable to have the account transferred to third party agencies or law firms. 

Third party agency or law firm are subjected to Fair Debt Collection Practices Act of 1977 (FDCPA). This law is administered by the Federal Trade Commission (FTC), this federal law limits the hours of collection agency or law firm to call the customers and prohibits communication of the debt to a third party. It also prohibits false or misleading representation and making threats of actions the agency cannot lawfully or does not intend to take.