Collections

Hi,
Yesterday I talked about the importance of the debtor to acknowledge communication from a collection agency. If a person chooses to completely ignore all written communication and repeated phone calls, in many instances the collector has no choice but to turn the account over to the attorneys for litigation. It is important to realize that even something as small as an ignored library fine may be reported to a credit bureau. This can result in significant increases in the cost of everything from insurance to mortgage costs. Remember when a collection agency makes contact, they want to resolve the matter just as quickly as the debtor. So when contacted, immediate response is in the debtor's best interest. The final collection remedy I have not yet discussed is litigation. Very seldom will a collector mention legal action if he or she has not already been authorized by the client to proceed in that manner if necessary. Once an account is transferred to attorneys, 99% of the time, the opportunity for account settlement has expired. If a debtor receives a demand letter from a law firm it is imperative that the debtor communicate immediately with the law firm. Otherwise, the debtor will start incurring high attorney fees and court costs. On many occasions, people are amazed that a relatively small bill (IE $500.00) has all of a sudden grown from $1,000.-$1,500. because it has been turned over to attorneys. The easiest way to prevent becoming involved in a long arduous collection process is to respond immediately to a collection agency and resolve the account. Next week, I will talk about when businesses should submit accounts to collection agencies.
Until then,
Alan