![]() If the debt is too large for small claims court, you can hire a debt collection lawyer to bring your case to court. If that’s the case, collections may be your best bet. However, for smaller past-due accounts, small claims court may cost more in time and money than you’re likely to collect. You don’t need a lawyer to appear with you in small claims court and, if your client doesn’t appear, you win the case automatically. If the above steps haven’t resulted in payment, you can take your client to small claims court if the debt you’re owed is smaller than your state’s small claims maximum. Given how expensive collections can be, a settlement might result in more money for you. Sometimes, it’s best to end a dispute with a payout that, although smaller than the original debt, resolves the conflict. ![]() In this case, you won’t have to send the client to collections. Sending a revised invoice with an added late fee ― or sometimes warning a client that you plan to send such an invoice ― can lead to payment. ![]() Resend your invoice with added late fees. Later letters can state your intention to send the client to collections or pursue legal action. Your first letter should have the same friendly yet firm tone you would use on the phone while reminding the client of their debts. You can send debt collection letters to a nonpaying client either after you call them or you could skip straight to this step. During the call, use a friendly but firm tone, refrain from scolding the client and explain to them how they can pay their debt. Call the debtor.Ī professional, to-the-point phone call can remind the client of their debt and show them that you intend to collect your debt. In the 90-day period spanning when an invoice is due and when you refer the client to collections, consider doing the following. Steps to take before sending someone to collections Instead, you can take several steps to try and get paid. You can ask the nonpaying client to pay their debt once the due date arrives ― you can’t refer them to collections at that point. Many experts recommend waiting 90 days after your invoice’s due date to send someone to collections. When should you send someone to collections? Nonfinancial institution businesses are now the creditors to an estimated $17.7 billion in debt nationwide ― and many times they will need to resort to debt collection to recoup that money. household has roughly $15,000 in credit card debt. households include credit card debt, student loans and medical debt. The most common types of debt incurred by U.S. In 2022, roughly 28 percent of Americans had at least one debt in collections. If you’re trying to reach a nonpaying client or customer yourself through your usual communication channels, or you’ve sent a client several letters stating their account is past due, doesn’t mean that’s sending them to collections.ĭebt collection is a massive industry totaling about $18.8 billion in the United States. To send someone to collections means to hire a collection agency to recover the person’s unpaid debt to you. What does it mean to send someone to collections? In this guide, we explain the rules you should follow to keep your business out of hot water when pursuing unpaid debts, and we walk you through how to send someone to collections while complying with the law.Įditor’s note: Are you looking for the right collections agency for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs. Federal law governs how you and the collection agencies you hire can and cannot attempt to collect a debt. The decision to send someone to collections is one that should be given serious consideration.
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