Collection Agencies

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480sparky

480sparky

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Iowegia
For the first time as an EC, I am afraid I am in need of a collection agency. Person owes me a considerable sum, and I don't see any other recourse (amount is more than small claims maximum) as they have not paid me anything.:mad: :mad:

So exactly how to collection agencies work? What do they charge? What should I look for, or avoid?:confused:

I'm not asking for references, just business advice from those who have 'been there, done that'.:cool:
 
480sparky said:
. . . (amount is more than small claims maximum). . .
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Not been there; not done that. But there are three options I can see, of which a collection agency is the least pleasant for all parties. One is to use the small claims court, and accept the loss of the amount that exceeds the maximum. Painful, yes, but perhaps it will cost less than the fee that the collection agency might demand from you. Also, I do not know whether the collection agency will demand to get a fee from you, even if they are not successful in getting any money out of your client. So perhaps you stand a higher risk than you now know. Be sure to read carefully any contract they give you to sign.

Small Claims and Collection Agency are two options. The third option is to file a lawsuit in a regular court. If they don't appear, you automatically win a judgment against them. If they do appear, and if you have a clear case, including evidence of your previous attempts to collect and any offers you had made for payment terms, you will likely also win a judgment against them. That opens the door for you to have their wages garnisheed. Is this hard to do? I don't know. Will the threat of this action bring them to seek a payment deal? I don't know. Would any serious attempt to collect be the straw that breaks their camel's back, and that sends them into bankruptcy court, with the result that you get nothing? I don't know.
 
One more thing. I vaguely recall a post on this Forum from a year or more ago. The discussion had to do with a failure to pay. The EC made the statement that he was considering removing the service meter, under the presumption that he was justified under the law in doing so. I think his idea was, "Hey, you didn't pay me for the service upgrade, so you don't get to use the service, until you do pay."

He was strongly discouraged from taking that action. Someone said he would be liable for arrest, under criminal law, for destruction of private property, or some such thing. The law would not have been on his side. I presume, given that you are contemplating legal, if strong, methods, you are not considering any such action.
 
You want I should go have a talk with em?

Lien the property if possible. If they want to refinance or sell they will have to settle up with you.
 
I am sure it varies from state to stae but in many states once installed it is their's till the courts tell you different. Avoid ending up on the wrong end of the law, because I am sure that would affect any judgement you try to win at a latter date.
 
might want to just ask your lawyer what's best. sometimes a letter from the lawyer is all it takes, if you need to lien or sue, he's going to probably handle it anyway.
 
Is there no mechanics lien in your state? I and many of the companies I have worked for in the past won't do any work whatsoever unless there is pre-lien info on hand, and never allow the dates to perfect one to pass. You'll be surprised at how fast they pay, because 90% of people or companies have a bank involved in the ownership of said property - and the bank will not tolorate a lien on thier collateral. Many people also charge interest on accounts past due, and will demand it as well.

Remember contracting is about contracts - not handshakes.
 
If you didn't file a "notice to owner" you cannot file a lien. Go the small claims route. I have done it and it works. If you get a judgement and they don't pay then you can file a lien. No need for a lawyer of collection agent.
 
celtic said:
How will you prove to the collection agency that this customer owes you money?
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I have an email from him saying so. I also have copies of all the invoices, statements, permits, etc etc etc
 
My collection agent charges 1/3. No charge until they collect. Plus you pay some small legal fieling fees. It starts with phone calls, letters, and personal visits. This also covers an attorny to go to court and keep fighting for you thru all the steps. Remember just because you have a lien or jugememnt does not mean instant payment.


Call around to compare. Some want more others want less of a pecentage. It also depends on the amount and how long the money has been owed.

Some attorneys will do this for you. But unless it's a high steaks amount for their 1/3 don't expect them to work very hard at it.
 
480sparky said:
I have an email from him saying so. I also have copies of all the invoices, statements, permits, etc etc etc
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emails can be spoofed (aka, phony)....statements, etc...What if he claims he paid you in cash or trade?
 
Ask my wife she can help you

Ask my wife she can help you

She is sort of a pro knee breaker...

http://www.constructioncommando.com

She can probably help you out with some ideas depending on your state. The rules vary quite a bit...we are in California so you have to follow certain deadlines for liens etc. Liens are definitely first choice in my book. If you have a judgement then you can haul them in for a debtors exam etc to find out where they hide their piggy bank....this is not legal advice just ideas...
 
There is a saying - you can't get blood from a turnip. If there is nothing there, maybe it is best to just turn it over to a collection agency and hope for the best.

You can get all the judgments and liens you want, but they are meaningless if the person is not solvent, since there is often nothing to take.

Liens offer the best long term solution since at some point the property will be sold, but it might be 50 years from now. A lot of people who don't pay don't have wages that are attachable anyway, since they often have outstanding garnishments that can't be satisfied in the first place.
 
This is shining example of why you should demand and receive a substantial downpayment and regular percentages on work completed.

I do, or else I don't work.

It keeps you from "getting all of your eggs in one basket" as the saying goes.

Did the customer give a reason for not paying?

Just my opinion
steve
 
hillbilly said:
This is shining example of why you should demand and receive a substantial downpayment and regular percentages on work completed.

I do, or else I don't work.

It keeps you from "getting all of your eggs in one basket" as the saying goes.

Did the customer give a reason for not paying?

Just my opinion
steve
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It certainly shows why if you are extending a substantial amount of credit to someone, you need to have some surety you will get paid. That surety could take many forms, but a down payment reduces the risk. a lot of bad credit risks can't even afford the down payment.
 
When I had my Business I filed lien on Job and never got paid, house was foreclosed upon and sold at auction..Never collected a dime..But It gives you the best feeling..Collection agency calls and harasses them they call and harass you and it is viscous cycle..the lien is the cheapest and less painful..it is 250 an hr for lawyer so it adds fast..Most liens are paid in couple yrs when property sold or refinanced because both have to have liens satisfied..had one file law suit claiming they did not owe that much, and I ended up with interest on my money..
 
I have used them before, they get 30% of the debt, but they also collect on debts I had already pretty much given up on.

A lien should be your first tool to get paid, but if for whatever reason you missed that boat, then I go to collection.

Personally I prefer the collection services to suing because:
1) Lawyers are parasites and sometimes in the end nobody wins but the lawyers.
2) Even if you get a judgment against them, it does not always mean you will get paid, but you still have to pay your lawyer...refer to reason #1
3) You may spend a LOT of your time, and there is no guaranty you will get paid.

I did a job for a big quarry last year, through a New Jersey GC. There were some pretty big holes in the plans, and lots of changes, it was a big gnarly mean GRC lots of big feeders, very tight timeline type of job with daily threats of liquidated damages. When the job was done, (and on time) the GC had me do little changes and warranty stuff and keep me thinking my changes were coming just long enough for my lien rights to run out.

Then he just decided he did not want to pay the OT and extras he promised me but he might be open to talking about splitting them with me, then after that failed he told me to sue him and hung up. Ironically this has happened before with two other New Jersey GCs; I don’t know how they play ball up there, but I don’t think I like it.

So I tried a collection agency figuring if that failed, I could always sue later. I had my check in 10 days. The agency figured out who owned the GC, and called him directly, on his cell phone, while he was playing golf. It turns out the project owner did pay the GC for my changes and OT, and the PM was cooking the books.

Sure it cost me 30% but it took very little of my time and I got my money fast.
 
charlie b said:
Not been there; not done that. But there are three options I can see, of which a collection agency is the least pleasant for all parties. One is to use the small claims court, and accept the loss of the amount that exceeds the maximum. Painful, yes, but perhaps it will cost less than the fee that the collection agency might demand from you. Also, I do not know whether the collection agency will demand to get a fee from you, even if they are not successful in getting any money out of your client. So perhaps you stand a higher risk than you now know. Be sure to read carefully any contract they give you to sign.

Small Claims and Collection Agency are two options. The third option is to file a lawsuit in a regular court. If they don't appear, you automatically win a judgment against them. If they do appear, and if you have a clear case, including evidence of your previous attempts to collect and any offers you had made for payment terms, you will likely also win a judgment against them. That opens the door for you to have their wages garnisheed. Is this hard to do? I don't know. Will the threat of this action bring them to seek a payment deal? I don't know. Would any serious attempt to collect be the straw that breaks their camel's back, and that sends them into bankruptcy court, with the result that you get nothing? I don't know.
Click to expand...

I believe that you can also file a lien against the property where you have done the work. That way the bank who holds the mortgage will go after them.
 
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