When renting property. landlords often have to contend with non-paying renters. These renters often move voluntarily, or are evicted, leaving their landlord wondering how to seek compensation for unpaid rent. If you are a landlord that is searching for a way to collect past due rent a collection agency might be your answer.
How to Collect Past Due Rent Using a Collection Agency
Attempt to contact your former tenant to make payment arrangements. Sending certified letters to the tenant’s new address (if one can be found) will help you to prove that every effort was made on your part to resolve the situation. File these letters along with any documents related to the rental property in the event that they are needed by the collection agency.
Find a collection agency that specializes in rental properties. There are a variety of collection agencies that deal solely with rental property and landlord/tenant disputes. When searching for a collection agency attempt to find a company that is local. Many landlords are more comfortable dealing with collection agencies that are easily accessible.
Choose the collection agency that has the most reasonable contingency/flat rate fees available. Also, be sure to find out what methods the collection agency will use to collect the past due rent and how long it usually takes them to collect the rent. Some collection agencies will seek court judgments while others will offer generous settlements.
Provide the collection agency with copies of all documents related to the lease. Collection agencies often have trouble collecting bad debts because of a lack of proof that the debt exists and has not already been paid. Giving the collection agency a copy of the signed lease and any other contracts that the tenant may have signed will help prove the validity of the debt.
It may also be necessary to provide proof of any letters sent demanding payment and all documents relating to the eviction of the tenants. If the agency requests this information it is important to provide it as soon as possible. Most collection agencies will request that documents first be faxed and then mailed.
Keep track of the progress of the collection agency. Some collection agencies will send weekly or monthly reports regarding the progress of their collection efforts. If you are not receive status updates call your collection agency at least once a month to find out how things are progressing.
This is important to avoid getting in a situation where the statute for collecting on a debt has run out and will sometimes encourage your collection agency to try more aggressive methods.
Accounts Retrievable System - Debt Collection Agency
Congress passed the Fair Debt Collection Practices Act in 1978, faced with an overwhelming number of complaints about debt collection. The act regulates third party debt collection agencies, not original creditors. Individual states may have additional consumer protection laws.
Contact Times
The law says third party debt collectors may contact you only between 8 a.m. and 9 p.m. Collectors also violate the law if they contact you during times you have told them are inconvenient. These hours could include when you are picking up the children, settling in for supper or getting ready for work.
Verbal Abuse
The act prohibits debt collectors from using any form of verbal abuse. They may not threaten you in any way. This includes threats to publicly broadcast your debt, supply false information on your credit report, tell your employer about your debt or take legal action they have no right to take. Profanity is prohibited, as well as any type of verbal insult.
Legal Action
A debt collection agency cannot file legal action in a place that is far from your home. Any legal action taken must be filed in your state, and you are not obligated to travel out of state to appear in court. An exception may be made depending on the status of the account and the delinquent dollar amount, but only if the account was opened in one state and you later moved to another state.
Third Party Contact
The law says agencies cannot contact any third party about your debt without consent. This includes employers, relatives and neighbors. In cases of missing contact information, the agency may be entitled to one phone call in an effort to find you. If this happens, the agency is not allowed to disclose that it is collecting a debt.
Identification
The agency must identify itself as a debt collector before discussing the matter at hand. Each communication, written or verbal, must include what is sometimes called a mini Miranda warning. This warning states that the communication is from a debt collector and it is attempting to collect a debt. Any information obtained will be used for that purpose only. If agencies do not communicate these two sentences, they are in direct violation of the Fair Debt Collection Practices Act.
Debt Verification
Upon your request, the debt collection agency must provide you with information about the debt it is trying to collect. You can request proof of the debt. Agencies also must provide by request the original creditor’s name, address and phone number, along with the original debt amount. They are given 30 days to respond to such a request and must cease communications until you receive the information.
Collection agencies find their workloads to be cyclical. When the economy is booming, collection agencies have fewer clients in need of their services. However, when the economy takes a turn for the worse, collection agencies suddenly find themselves inundated with new business and clients.
Locating Clients
Collection agencies solicit work from businesses with large outstanding unpaid balances. After exhausting all attempts to collect on the outstanding debts, frustrated business owners turn their collection problems over to the third party debt collection agencies. The collection agency takes on the responsibility of collecting the outstanding debts. Collection agencies employ tried and proven practices which give them a higher success rate at securing past due and unpaid balances than their clients.
Earning Money by Collecting Debts
Debt collection agencies make money on a contingency basis. Their income is directly related to the amount of outstanding debt cases from which they actually collect money. There are several ways in which a debt collection agency can earn money. Some agencies purchase the outstanding debt from their client. In other words, they pay the client a small percentage of what the outstanding debt is worth. The client, who previously faced a total write off as bad debt, agrees to the arrangement because getting something is better than nothing. The debt collection agency, the new owner of the outstanding debt, goes about collecting the outstanding balances.
In calculating how much to pay a client for the bad debt, the collection agency takes into consideration its success rate in collecting outstanding debt versus the amount the agency is willing to pay for it. The difference between what the agency pays for the debt and the amount it collects for the debt is the collection agency’s profit. Other agencies negotiate a commission percentage. The client retains ownership of the bad debt, but the collection agency receives a percentage of each outstanding balance collected.
Varying Degrees of Collection
The debt collection agency has several degrees of debt collection. It starts with a friendly reminder and then increase the intensity and frequency of the collection efforts. Collection agencies are mindful, however, not to violate the law. They are Federally governed by the Fair Credit Reporting Act and locally governed by the laws existing in the state, city and locality of the area in which they operate.
Personal debt collection is the process of collecting money that is owed to a private individual, typically by another private individual. Collection of personal debt may be harder for an individual than a company, simply because most do not have the experience and resources needed to properly execute a collection strategy. Typically, the debt is unsecured, which only works to make collection even more difficult because the individual does not have a personal stake in paying it back. Often, personal debt collection involves use of a lawyer or going to small claims court.
Often, the first step in the process of personal debt collection begins with an initial contact to the person owing the debt. The best way to do this is by letter. The sender should keep a copy of the letter, and send the original by certified mail, with a return receipt requested. This allows the sender to document the attempt, which will provide credibility to the claim in court. Of course, it is also advisable to have a signed agreement regarding the debt before the money is ever provided; without this, it may not always be possible to collect.
If the attempt to first settle the debt is unsuccessful, subsequent attempts may involve more letters, possibly with an attorney. If the collector decides to use an attorney, he or she should get a quote on the price before making the hire. Each individual needs to determine whether hiring an attorney is worth it. Typically, a good rule of thumb to use is to only hire an attorney if the cost of the attorney will be less than half of what the debt is.
When these attempts still does no work, the personal debt collection process will typically involve going to court, or at least filing a claim. The threat of going to court may prompt the individual to settle the debt. If not, a clerk of court can provide individuals with forms to file a small claim, or at least direct a person to an appropriate resource. Often, a plaintiff does not need to use the services of an attorney for small claims unless there is some unusual complication.
The most important thing to do when facing a personal debt collection is to document as much as possible. This includes having paper trails for the existence of the debt, as well as each attempt to collect it. While verbal agreements are typically legally enforceable, it may be harder to prove the existence of that agreement unless both sides stipulate that it was made. Having it written down removes any doubt.
Accounts Retrievable Systems Debt Collection Agency
The debt collection process typically begins with the original creditor. Customers who miss a payment may receive a letter in the mail or a phone call reminding them that payment is due. Missed payments resolved at this early stage typically have only minor consequences, such as a small fee or a minor incident on the debtor’s credit report. As time passes or the debtor misses more payments, however, the debt collection process becomes more serious; the creditor may begin calling more often or sending more urgent correspondence through the mail. About six months after the first missed payment, the creditor typically charges off the account.
A charged-off account means that the original creditor is giving up and selling the debt to an outside collection agency. This action typically has a severe impact on the debtor’s credit report. At this point, the collection agency is required by law to notify the debtor that it has taken over the account.
After receiving notification from the collection agency, the debtor typically has 30 days to challenge the authenticity of the debt. If the debtor argues that the debt is not valid, the collection agency is required to verify the account with the original creditor. The agency cannot take further action while the account is in dispute.
Once the 30 days have passed or the account has been validated with the original creditor, the agency begins the debt collection process. Agencies usually contact the debtor by mail or by phone and demand payment. Some collection agencies may be willing to work with the debtor by offering payment plans or settlement amounts, but they have the right to request as much as they want as long as it does not exceed the total amount owed. Collectors are not obligated to accept a settlement offer or payment plan from the debtor.
While debt collectors may employ many negotiation tactics in order to collect money, the Fair Debt Collection Practices Act prohibits certain behaviors. For example, collectors cannot call before 8 am or after 9 pm. They are not allowed to harass debtors, use obscene language, or threaten them with harm. Collectors may not make false claims about the debt or make threats involving legal action that they do not plan to actually take.
If the debtor fails to pay the amount owed or make settlement arrangements, the agency may either sell the account to another company or to a collection attorney. An attorney may take legal action against the debtor, including a judgment or lawsuit. Settlement at this point in the debt collection process often means an appearance in court and additional fines and fees. It also has a severely negative impact on the debtor’s credit report.
Accounts Retrievable Systems - Debt Collection Agency
A debt collector is a professional who is responsible for talking with people about paying money that they owe. Also known as bill, credit, or account collectors, they either work in the collections department of the company that is owed the money, or in a collection agency employed by the company to recover the overdue funds. Companies who are owed money are referred to as creditors, while people who owe these companies are referred to as debtors.
If the creditor is not able to procure payment from the debtor through normal billing procedures, the customer’s account is sent to the debt collector. In some cases, instead of owning an in-house department that can take care of such debts, the creditor transfers the account to an independent, stand-alone company called a collection agency where debt collectors are employed. The collector, in either case, contacts the debtor via telephone or mail to find out the reasons for non-payment. A debtor can choose to dispute the bill, or expresses dissatisfaction in the goods or services rendered for it, in which case the debt collector can refer the debtor to the creditor’s customer service department for resolution. If the bill is determined as fair or valid, however, it is the job of the collector to follow up with the debtor in the effort to ensure payment.
In cases where the debtor is willing to pay yet experiences financial difficulties and cannot pay the amount owed in full, the debt collector can arrange a payment plan. If the debtor continues to dispute the money owed and refuses to pay up, however, the collector can escalate the issue to an attorney to pursue legal action. In instances where the unpaid bill is for merchandise such as a vehicle, the debt collector can supervise repossession of such property. The debt collector also has to search for the debtor in the instance that he or she is no longer at the address listed, thus tracing them by checking for forwarding addresses at the post office. Tracing work might also involve calling a former workplace and residential phone numbers to interview former co-workers and neighbors concerning the debtor’s whereabouts.
The job of debt collector can be demanding. A major component of the job is dealing with people who often are not willing to talk about their debts. Therefore, persuasive communication, patience, persistence, and a pleasant voice typically are the most treasured traits of a debt collector.
Collection agencies are an important service for businesses to know about, as sometimes there is the unfortunate scenario where money is withheld by the owing party, and you may be stuck feeling there is no option. Just because two parties enter into an agreement where a quantity of money will be exchanged for a service rendered doesn’t guarantee that each party will comply, and when this sad case plays out, its important to know that there is recourse. Here are all the things that a collection agency can do for you.
The first and most obvious is retrieving the money that you have owed to you. In this sense, the collection agency enacts justice by redressing the harm thats been done. Collection agencies work with a number of industries, including the business, medical, manufacturer and holding sectors. When you are stressed out spending time trying to recoup something that should already be yours, the stress and time spent is all a waste and a needless diversion from your core business. When you try and pursue a creditor yourself, it doesn’t really intimidate them normally because they have already made the decision to try and elude you. In other words, they have anticipated your approach and have decided its a consequence they can live with. But when you hire a company whose sole purpose is recouping money, they very well may change their mind!
As well, collection agencies can find the person who owes you money! Without this, its impossible to collect. There are different means of tracking people, but its important to know what their financial status is too so that you can use this knowledge against them to get back what is owed. A good collection agency doesn’t only ask for the money, they find it!
Collection agencies recoup money from any kind of bad debt, usually no matter what the nature of the lending was. This is important, since dealing with individuals who borrow money is not the same thing as dealing with businesses. Individuals, in this respect, are more slippery, and they can act in their own self-interest, whereas businesses have a wide range of ties to things like customers, employees, and their public reputation, and an outstanding debt threatens to sever the business from all of these. While individuals have their reputation to defend as well, they’re a lot less public, generally, then companies, and they can use their anonymity to stay in hiding longer. This isn’t just a headache during the process of recouping the money, but the larger issue is that in the end the money does in fact come to its proper place! This is where the collection agency steps in. They do this for a living.
Its a shame that such agencies are needed, but shady business practices have existed as long as business itself and lamenting the inevitable is always a waste of tears! If you are owed money and you get that horrible gut feeling like its not coming, call the collection agency.
If you own your own business and there’s an outstanding debt, perhaps nothing is more aggravating. You feel like the money should be yours, in your bank, because it’s been earned, and it was agreed that by now it would be in your possession. Only a client or business is failing to uphold their end of the bargain. What you need is a good collection agency to retrieve the money for you. This service fulfills important functions that can’t be left in the hands of disreputable companies doing the same thing.
One of the key things is timing. Even though you won’t be the one spending the time recouping the money, you want to know that it’s being handled efficiently, and the longer the company goes without producing results, the greater your doubt becomes. And this kind of consideration is if you’re lucky! There are all kinds of stories about companies who have failed to recoup the money altogether, and along came another company who was able to do it in not very much time at all. So on the one hand you want your company to do it quickly, but most important is that they do it at all!
Before they begin to recoup the money, a good company will engage you in a dialogue about their plan. In this way, they will set your mind at ease, and convince you that a resolution is imminent. You should walk away from this discussion feeling grateful you called this particular company. Some lackluster companies don’t commit to this step, and leave you no reason to feel assured, or confident that they are serious about procuring your money.
As well, a good collection agency is certified. This is a crucial step, because if a company doesn’t have this certification, they don’t have the same weight, or threatening force behind them. After all, if the withholding party didn’t give you the money off the bat, why would they hand it over to a party with virtually the same lack of power? When someone knocks on their door, they need to have some higher authority, or else the odds of regaining your money seriously diminish. Also, the company should be solely focused on collecting debts. When it’s their primary job, they are more focused and experienced in it. It’s the same logic behind why you’d order steak from a steak house instead of a burger. Go with the people who stick to one thing and do it well.
Debt collecting can be not just aggravating, but time consuming, and can seriously hinder your business’ cash flow and your forward growth. It’s best to make sure you hire a reputable company with a proven track record when you need to coerce somebody into paying you what is rightfully yours. It’s a sad state of affairs when an intermediary is necessary in order to recoup what should be given to you freely, as agreed upon, but reality can be tough, so go with the pros.
Collection agencies fulfill a vital role in business operations. Instead of spending all your time and energy trying to reach debtors, you can instead turn your efforts towards the more rewarding aspects of running your business.
Collection agencies, as with all service sectors, have their share of bad apples. It is imperative, therefore, that you find the best collection agency to manage your debt collection activities for you.
Before deciding to use any collection agency, do your part in investigating the collection agency industry. Be sure to check out the standard market rates for collection agencies. Usually, commissions for successful collections range from 15%-50% of the total amount collected. This percentage varies with the amount of debt. It is also dependent on the type of account and the expected level of difficulty in collecting.
Do not be hasty by choosing the collection agency with the least commission percentage. If the collection agency offers its services for commissions far below the standard going rate, you have cause to be skeptical. You are not paying collection agencies anything for their operations, so they have to shoulder expenses incurred through debt collection efforts that are not certain to bear fruit. If a collection agency offers its service at amazingly low rates, where does it get its operating expenses? Likewise, be cautious in choosing collection agencies which have outrageously high success rates. Ask for proof and ask for a detailed accounting of their collection methods. These collection agencies that can offer very low commission and extremely high success rates can be either incredibly efficient or incredibly corrupt. For help in choosing the best collection agency, you can ask for advice from colleagues who have used collection agencies.
Once you have chosen your collection agency, give it your full cooperation and support. Give them all the information that they need in their debt collection efforts like detailed statement of accounts, copies of checks and invoices, copies of mail correspondence to and from the debtor, notes on telephone calls, promises made by debtors and your company’s concessions, and your debtor’s records (especially helpful if the debtor has skipped town or has gone missing).
After turning over an account to a collection agency, do not interfere in any way. If you have chosen wisely, your collection agency knows how to do its job. Let the collection agency do the job from which it will earn its keep.
People are often very frightened or intimidated by Debt Collection Agencies, often because they are not sure about the powers these companies have. It is fair to say that some of the less scrupulous debt collection agencies lead people to believe that they have greater powers than they actually do, which does not help the situation.
Debt Collection Agencies are organizations that are used by other companies to collect unpaid debts. Some larger companies actually have their own debt collection departments as part of their businesses, but most will farm such work out to specialist collection agencies. Using collection agents for this kind of work is usually done on a basis of either a fixed fee or a percentage of the outstanding debt. Some of these debt collectors will specialize in actually buying the unpaid debts outright. This means that if you owe money to a company and they sell your debt to a collection agency, you then legally owe that money to the collection agency instead.
When companies sell debts to debt collection agents they only get a small proportion of the amount owed. Whatever the agency can get above what they pay is their profit, and how they make their money. The company selling such debts will then write off the difference between what you owed and what they get from the agency. The fact that the only source of income for some collection agencies is what they can collect on debts leads to them being highly motivated to get that money, which has been known to result in some unfair practices.
Debt collectors cannot enter your home or take away your possessions. Essentially all a debt collector can do is ask you for the money. The problem is that they can do this over and over and over again, and some of the more dodgy ones have been known to sound threatening or intimidating. A good debt collector will actually try to establish a positive relationship with the debtor in order to begin discussing how the debt might be repaid. Such an agreement can even involve agreeing to write off a proportion of the debt.
Debt collection agents should not contact you at inconvenient times such as very early in the morning or late at night. They can call you at work, but must stop if you tell them that your employer does not permit you to take calls while at work. No debt collector is allowed to threaten you with violence or harm in any way, or to use obscene language. Neither are they allowed to make false claims about the amount you owe, lie about their official status or legal rights, threaten to take your property or have you arrested or have your wages garnished (known as attachment of earnings in UK).
In the US the Fair Debt Collection Practices Act regulates how debt collection agencies can operate. Many states also have their own laws relating to debt collection, and in general if the state law is considered to be more restrictive than the FDCPA regulations, then the state law is what counts.
In the UK, debt collection agencies are covered by the Office of Fair Trading, who set out guidelines on how they should operate, and list examples of unfair practices, such as harassment or pretending they have more powers and rights than they do.
