Collecting Unsecured Debt

Collecting Unsecured Debt

There are some serious difficulties involved with collecting an unsecured account, especially when it’s past due. However, this doesn’t mean it’s impossible; in fact, there are several good reasons why you may be able to collect your money after all. Here are some key questions to ask when attempting to determine the collectability of an unsecured account.

Where’s the paperwork? If you have thorough documentation of the account, up to date and completely accurate, you’re going to be in much better luck than someone who only kept half the relevant paperwork to an account. As in most types of legal issues, the more information you have backing up your claim, the better!

Here are some of the types of documentation that will be useful when negotiating your ability to collect: initial contracts or purchase orders, account statements, bounced checks, received payment dates, copies of all written communications between yourself and the customer, open invoices, and many more.

What are the time constraints? If your customer is only a month behind on their account, you have a much better chance on collecting. This only gets harder after time, so the earlier you can begin to proceed with your collections on late payments, the easier it will be. After six months, research shows that you may have as little as a 52% chance at collecting on an old account. So get started!

What’s the customer up to now? If the customer has gone out of business, it will be a lot harder to collect. Lookup their corporate registration or physically go to the building where they operate. If it’s vacant, the process will be much different than if they’re simply avoiding you.

Even if their business is failing, you may be able to look into the customer’s assets to determine other ways they could settle in your favor. Some key ways to do this include searching for their credit report, skip trace, or doing a property owner, vehicle, or public record search.

Is it just you? If your customer is having a hard time paying you back, it’s likely not an isolated incident. With multiple creditors trying to collect on the same company, it will be harder for you to receive your piece of the potentially tiny pie. If they’ve filed for bankruptcy protection, you’ll need to stop collecting, but can file a proof of claim to help recoup some of your losses.

How CMCS Can Help: At Central Mercantile Collection Services, we’re dedicated to helping you collect what you’re due as painlessly as possible. We’ve served the Detroit Metro area since 1984, and have been working in Minnesota since 1989. Over the years, we’ve built up a national network of collection attorneys with superior service for our clients. When CMCS takes on a client, you’ll never have to play phone tag or have your concerns go unheard. For a free evaluation of how we can help you collect on an unsecured debt, call our office at 800-223-6259 today!