A Layman�s Guide to Collecting a Bad
Account
By Walt Roberts, ASSIST Executive Vice
President
SOME OF YOU KNOW I have been around a while, with that in mind I will give you some of my techniques to collecting a bad account. Step number one, check your contract and more importantly, have an attorney check your contract. You should all have a $5,000 early cancelation fee, further it states if I cancel you for non-payment, the $5,000 early cancelation fee is charged.
In many circumstances a client�s invoice on the larger contracts can get more than $10,000 quick; maybe in a week or two. That�s where you need to have an attorney really look over that contract for payment terms. On large contracts, I am very blunt with the client about payment terms. If you want to stay in business, you must be!
Next, do not let the smaller clients get out more than $10,000; if you do you are probably headed for district court which could take months. Under $10,000 it can go in front of your local justice of the peace court much easier and cheaper. So now you go to the Justice of the Peace in your area (he will be friendlier). It doesn�t matter where the work was performed and filed on Mr. Dead Beat client. It�s going to cost around a $100 depending on the service (constables delivery) and, you want the constables to deliver it. Now, depending on your JP and the constable�s office it could take 30 days for service. Therefore, I file when the client is out from 45 to 60 days.
Once serviced, I fax a copy of the notice the JP sends me to the deadbeat client (sometimes that makes them want to pay or settle). That $5,000 cancelation fee makes them a little more anxious to settle (especially on a $10,000 patrol bill). Now if your outstanding balance is $6,500 on Mr. Dead Beat, you are only able to get $10,000 so your collection of the early cancelation is only going to be $3,500, but that�s better than� a poke in the eye with a sharp stick.�
OK, SO NOW YOU HAVE FILED and you have a court date. I normally call and fax notice giving the client one more shot at settling. Let�s say they do not settle, you go to court. I have an attorney for this and only this. We have a pre-set rate of $150 per hour. I�ve never had a case to go over an hour, however unless you�re very experienced, I recommend using an attorney.
If Mr. Dead Beat client shows up with an attorney, unless you have a law degree, his attorney will kick your butt with rules we know nothing about. So you win and get a judgment, but Mr. Dead Beat is not paying. You have to wait 30 days for Mr. Dead Beat to appeal. However, if you get the judgment for him to appeal, he has to put a dollar amount double the judgment amount.
By the way, in 35 years in this business, I�ve never had one do this. So, now your 10 days of judgment is expired, no appeals are filed and you still do not have your money. Go back to your JP and file a writ of execution. Again, the constable will not act quickly, but it is a way of getting your money so it�s worth your time, especially if you�re making that $5,000 cancellation fee.
Now the constable�s office visits Mr. Dead Beat and lets him know they are coming to serve the writ. That�s two fold. One, it gives Mr. Dead Beat another opportunity to pay, and secondly, they get a look at his stuff, many times the constable will take a visual inventory. Some constables will hang around until the truck shows up; yes I said the truck shows up.
When constables serve a writ of execution and begin hulling stuff off they value it at garage sale or resale prices. They are going to get theirs and your monies worth. I have never had it get to this stage, but the constable holds a sale and you should get the proceeds minus the constable�s fees. Good luck.
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