Like any entrepreneur learning sooner or later, some people do not pay their bills. When confronted with this situation, you must first decide whether the relationship with your clients exceed the amount due and how much time and effort you want to devote to collect money owed.
If your relationship with your customers is still intact, you should call him immediately and find out why your bill is not be paid. If it is only a misunderstanding or miscommunication, you can best resolve it by an open discussion directly.
However, if your relationship has deteriorated to the point that you no longer expect to do business with this client and that the client is acting unreasonably in refusing to pay their bills, then you must decide whether to pursue the collection and how to do it.
Debt is always worth collecting as long as it does not cost you more in time and money than they are worth. In general, the larger the debt, the more time and effort you will be ready to devote to try to collect it.
If the debtor is ready to pay, collecting the money owed often require nothing more than sending letter and making a phone call requesting to be paid. If you do not wish to spend much time, or are uncomfortable asking the debtor to pay you, the collection agencies can perform this task for you in exchange for a “contingency fee” where they retain a certain percentage of what they collect. However, if the debtor is not willing to pay you voluntarily, sending letter and making phone calls may be nothing more than a waste of time. You either write off the debt or hire a lawyer.
A common misconception is that it costs much money to hire a lawyer to collect the debt. Unlike litigation lawyers that charge the cost per hour with no result, most collection lawyers charge a ” contingency fees “, very similar to a collection agencies. Just like collection agencies, they also write letter and make phone calls : except that their messages to the debtor will be that a lawsuit will be commenced if the debt is not paid. In contrast to the hourly rate of litigation lawyers, however, the debt collection lawyer is paid only when he actually collect the money owed.
Besides the payment method, there is another distinction that is very important to consider when selecting a debt collection attorney. While most lawyers can file a lawsuit and obtain a judgment (a determination by the court that the defendant is indebted to the plaintiff for a certain amount ), only a debt collection attorney with advanced technology and computer software have the tools necessary to find an asset or employment to enforce the judgments. If these assets or employment are located, the debtor’s salary can be garnished, the bank accounts seized, and their property can be sold and liquidated.
Finally, once you decide to collect what is due, you can call and ask for the payment, you can hire collection agencies to call and write letters for you, you can hire a litigation lawyer and pay them to sue, or you can hire an experience debt collection attorney to get to know and enforce judgments in exchange for a percentage of what they can collect.