When a small firm has done many pieces of work for a large firm and have always been paid on time, it could come as a shock when the latest invoice has remained outstanding beyond its final payment date. If the small firm has had experience of bad debts in the past and has used either solicitors or Debt Collection firm then they could have felt the pinch when it comes to finding the required fees. Running at some 10% of the invoice value or more plus extras and possibly an up front fee as well, they can certainly hit the revenue position of a small firm and so they could well look to see if there is another Debt Collection strategy they can use.

Debt Collection Software can provide just such an alternative in that it is definitely cheaper than the fees for solicitors or Debt Collection firm, plus it is a pay once use many times strategy, rather than pay every time. The small firm will have to be careful in assessing the offerings on the Debt Collection Software market, since we could assume that their knowledge of the Debt Collection activity is not too good, they will want a suite that has a good manual that will hold their hands as they are walked through the technicalities of the Debt Collection activity. Such delights as the laws that can be used, for example the “Late Payment of Commercial Debts (Interest) Act 2002”, which allows the small firm to impose a one off charge as well as daily interest on the large firm until they pay the invoice. This legislation can be intricate and needs careful attention to detail before it is used, especially when writing the vital Debt Collection Letters that the large firm will receive, since these could be shown in court, if the case gets that far so they need to be right.

The Debt Collection Letters form the core of the Debt Collection activity and so when the small firm is looking at personnel to operate the suite, as well as computer literacy they should have a good command of English since the Debt Collection Letters will need to be accurate both in spelling and grammar as well as content. To assist them the Debt Collection Software should have a good section in the manual covering Debt Collection Letters so that the personnel have a good understanding as to what they can and cannot say, so tips on what Debt Collection firm put into their Debt Collection Letters will be useful.

It will be hoped that after grasping the details of both the Debt Collection activity and writing good Debt Collection Letters that the personnel in the small firm can write actual Debt Collection Letters and spur the large firm into paying the invoice. If this doesn’t work then their next move would usually be court. Before the court officials will allow the case to be accepted they will want to see detailed information that the small firm has made serious efforts to try and get the large firm to pay up. This where a good Debt Collection Software suite can help by using database functionality, either internally or by connecting to a standard database suite such as Oracle or Access. In this way all of the steps of the Debt Collection activity that the small firm have carried out, such as writing and sending Debt Collection Letters, incoming letters and emails, phone calls, can be registered. When the time comes the database could output a printed report that would suffice as evidence for the court officials.

The small firm would need to realise that once they take the large firm to court it could be the end of any future jobs from them, so it is better if they concentrate on good Debt Collection Letters and try and get the invoice paid by that process.

By: Jon Ochs August 3rd, 2008

If you find yourself in financial difficulty and are falling late on some of your bills, you may have some contact with collectors via mail or telephone. On several occasions, you may encounter some terms or business practices that were new to you. Here are some straight answers to some common questions about the debt collection industry. I hope you find this information helpful in dealing with the issues that may arise as a result of your financial hardship.

I received a letter from a collection agency regarding a credit card bill. How did they receive my information? Why isn’t the credit card company contacting me directly?

The company or organization that you initially signed a contract with is referred to as the original creditor. For example, let’s say you obtained a credit card account with MBNA. If your account becomes past due, MBNA, your original creditor, will send reminders and call you in an attempt to get you to pay the amount due. When your account becomes more delinquent, approximately 180 days, MBNA may have an outside collection agency, ABC Acquisitions, attempt to collect payment. This company is a third-party collector. Keep in mind that your accounts may be assigned to or bought and sold by several collection agencies during the course of the collection process. You may find it helpful to keep paperwork organized and to track the process as each account changes hands.

A collector recently contacted me about an unpaid account that I incurred more than 6 years ago. Do I still owe really old debts?

On way to determine if you still owe the debt is to check the statute of limitations for your state. The statute of limitations varies depending on the state and the type of debt. As an example, a collection agency may still be allowed to attempt to collect the debt, but may not be allowed to file a lawsuit against you because too much time has passed. If a collector tries to persuade you to make a payment on an old debt, be sure you understand the consequences you could bring upon yourself by making a payment. If you do make a payment, you may be causing more harm than good since even the smallest payment can reset the statute of limitations for that account. This would inevitably lead to more aggressive collections and possibly lawsuits. In some jurisdictions, even an acknowledgment that the debt is yours is enough to reset the clock on the statute of limitations.

I received a collection letter from a law firm concerning a debt. Does this mean that I am being sued?

No. In recent years it has been shown that often a law firm or attorney can be more effective at collecting a debt than just a regular debt collection company. This is basically due to the fact that people are generally intimidated by attorneys and law firms. Keep in mind that in this case, the law firm or attorney is simply acting as a debt collector, and is subject to all the same rules as any debt collector as outlined in the Fair Debt Collection Practices Act (FDCPA). If you are in fact being sued, you will, in most cases, be served with a summons to appear in court.

One of my creditors called me and said that my account will be “Charged Off”. What does that mean exactly, and will I still owe the debt after it has been “Charged Off”?

Charge-off is a term that is used to classify delinquent accounts for tax purposes. The word “charge-off” is used to report the delinquent account as a loss for the creditor. A debt is usually charged-off after there has been no payment made for more than 180 days. Although an account has been charged-off, you do still owe the debt. A creditor will typically either assign, or sell the debt to a collector after charge-off. Another important thing to be aware of with a charge-off is that if the account is sold to a third party collector, that collector may also report the delinquent account on your credit. This may result in an additional negative trade line on your credit reports.

If you are in a financial position where you can no longer make the minimum payments on your credit cards, medical bills, or other unsecured accounts, there are programs available that can help you to resolve those accounts quickly and allow you to avoid bankrupcty. Here is a debt relief program we recommend.