Magazine article Business Credit

Collections or Small Claims?

Magazine article Business Credit

Collections or Small Claims?

Article excerpt

This past year has been a challenge for credit and collection professionals. As with many businesses, a number of my customers have not met their financial obligations to my company, leaving me to decide what collection option to use. I generally use an outside collection agency after I have done all I can to collect the past due balance. The agency I use has been quite successful in collecting money for me, but on a few accounts it has given up too soon.

Recently, I had two accounts that I sent to a collection agency. Within 60 days the agency deemed both accounts uncollectable. The agency's collectors stated that they had been unable to find the business owners or didn't get any responses to their demands. Seeing no compelling reason for the collection agency to have dosed the accounts, I did some further investigating of my own. I discovered that each account still conducted business, as verified through my local industry trade group. I decided to use the small claims court system to seek a judgment against the business/owners, or perhaps get their attention by filing a claim against them and having them served.

In both of these cases, I had 100% success. The first customer, after being served by the county sheriff, immediately called his attorney, who then called me, and we worked out a stipulation settlement to satisfy the debt. After the stipulation was signed, I had it filed with the small claims court. I received the payment as indicated in the stipulation, and the case was dismissed.

The second customer, after being served by the county sheriff, immediately called me to find out where he could send the full balance, plus all court costs. I received his certified funds check within two days of our conversation, and I promptly dismissed the case.

In three different cases where I've actually had to attend a small claims hearing, the defendants didn't show up, thus granting me default judgments. …

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