Debt: to sue or not to sue; What to do before you turn a receivable over to a collector.For some companies, selecting accounts to place into collection may be as simple as turning over all accounts that are over 60 days old. For the rest of us (abuse) for The Rest Of Us - (From the Macintosh slogan "The computer for the rest of us") 1. Used to describe a spiffy product whose affordability shames other comparable products, or (more often) used sarcastically to describe spiffy but very overpriced products. 2. , however, if we are to make intelligent decisions about filing suit to collect debts, there are several important considerations to analyze before turning a debt over to a collection attorney. Before placing your receivable with a collection professional, consider the following factors: [ILLUSTRATION OMITTED] Is the debtor collectible collectible An asset of limited supply that is sought for a variety of reasons including, it is hoped, an increase in value. Stamps, antiques, coins, and works of art are among the many things usually classified as collectibles. ? This is probably the most important consideration to examine before pursuing the debt. After all, if the debtor is not collectible, there is no point in pursuing it. An uncollectible judgment is simply the result of good money thrown after bad. In making this determination, your collection professional should examine the debtor as follows: * Is it still in business? * Does the debtor still answer its telephone? * Does the debtor have assets in its name including a car or real estate? * Is there a personal guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. on the debt? If so, does the guarantor guarantor n. a person or entity that agrees to be responsible for another's debt or performance under a contract, if the other fails to pay or perform. (See: guarantee) GUARANTOR, contracts. He who makes a guaranty. 2. have assets? * Are there any tax liens Tax Lien A claim imposed by the federal government to liquidate a persons property until owing tax and debt is fully paid. Notes: Tax liens can be purchased from the government in the form of an investment. placed on the debtor? * Does the debtor have any judgments against it? Do you know where the debtor is? Some individual debtors make a living from going into debt and then going out of business. We call these "professional debtors." An individual may move out of his living quarters and not leave a forwarding address forwarding address forward n → adresse f de réexpédition . A company may close its doors and stop answering its phones. While you are not necessarily out of luck if this happens, it is a major factor to consider when deciding whether to file suit. Is this receivable from a customer or a debtor? The fact is that your customer might be temporarily experiencing a cash flow problem. If this is the case, then your company, as its supplier, may exercise some compassion, couple it with caution and emerge from this situation with your receivable paid and looking like a hero to your customer. The first order of business is to determine whether this entity is still a customer or is now a debtor. The difference being that a debtor is one that you pursue for a debt. A customer is one that you love, honor and respect and help. So how do you go about telling the difference? It's really easier than you think. Ask your customer for cooperation during this difficult time. Ask your customer about what is going on at its business. Do not be afraid to ask for a plan as to how your customer will pay the balance that it owes you. Don't be afraid to tell your customer that its proposed plan will not work for you. Most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , don't be afraid to ask for a personal guaranty from the company owner after you have come to payment arrangement on the debt. If you do not get cooperation from the customer, then it has crossed over and become a debtor. Time is money. If the clock is ticking ticking a coat color pigmentation pattern in which hairs of one color are distributed in small groups throughout the background color, e.g. Australian cattle dog. Called also speckling. against your debtor, then it is ticking against your opportunity to collect. What will it cost to collect the debt? Good question. You have to look at two kinds of costs: out-of-pocket costs out-of-pocket costs Managed care Health care costs that a covered person must pay out of pocket–eg, coinsurance, deductibles, etc. See Copayment. and fees. Out-of-pocket costs are what you will be charged to pursue the debt. For example, some collection agencies will charge a fixed fee for which they will send the debtor a series of dunning Dunning The process of communicating with customers to ensure the collection of accounts receivable. Notes: Dunning can start with gentle reminders and then progress to nearly threatening letters as accounts become more past due. letters. Fees can vary. If the debt and debtor are both large and collection looks likely, you may want to consider hiring an attorney on an hourly basis. Typically, the debt should be over $100,000 and its collectibility should be reasonably assured. Barring this, you may wish to consider hiring your collection professional on a contingency basis so that you have no out-of-pocket exposure and only pay a fee when you get results. RELATED ARTICLE: Debt: Pitfalls to avoid As a business owner or a business manager, there are several pitfalls that frequently get someone in your position into trouble. While these are easily avoidable, the consequences of falling victim to these pitfalls can be expensive. Read on and avoid becoming a victim. Don't ignore that garnishment garnishment, in law, means of requiring a third party who holds a debt (including wages) due a defendant to retain the property temporarily. The garnishment consists of a warning, in the form of a judgment, to the third party, called the garnishee, not to deliver the served on your business. If you have been served with a garnishment on your employee's wages, DO NOT IGNORE IT. You must respond to the garnishment within 14 days or a judgment will be entered against your business. The garnishment is a lawsuit by the creditor against the business or business owner. Take a moment and fill out the enclosed en·close also in·close tr.v. en·closed, en·clos·ing, en·clos·es 1. To surround on all sides; close in. 2. To fence in so as to prevent common use: enclosed the pasture. response form and follow the instructions. If you have questions about what you are supposed to do, call your lawyer. Your failure to file a response will subject you to a judgment for the full amount that your employee owes the creditor. Don't fire the employee that is being garnished. Be aware that you may not fire your employees because their wages were garnished. If they can prove that you terminated their employment because of the wage garnishment, they can sue you and collect damages and attorneys' fees. Review your accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying aging schedule Aging schedule A table of accounts receivable broken down into age categories (such as 0-30 days, 30-60 days, and 60-90 days), which is used to determine if customer payments are keeping close to schedule. frequently. A customer that begins to experience cash flow problems will usually take longer and longer to pay. Your aging schedule is a perfect indicator of which of your customers is getting into trouble. If your customer ultimately goes out of business, you do not want it going out of business with the money it owes you. One of the best tools that you have to gauge your clients' financial liquidity is to review your accounts receivable aging schedule frequently. Call your customers that are not paying on time. If after you have reviewed your accounts receivable aging schedule, you develop a concern about a customer's financial stability, then call the customer. That customer is holding your money. You have a right to inquire in·quire also en·quire v. in·quired, in·quir·ing, in·quires v.intr. 1. To seek information by asking a question: inquired about prices. 2. as to how their business is doing. If your customer is having a problem paying your bills on time, then consider putting that customer on a C.O.D. basis for new goods or services and making a payment arrangement on the balance. For more information, visit www.creditor-law.com. Source: Nitzkin & Associates Gary Nitzkin is founder of Nitzkin & Associates, Debt Collection Attorneys in Southfield, a Silverlevel member of the Detroit Regional Chamber. [ILLUSTRATION OMITTED] |
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