When Should You Hire an Attorney Regarding Debt Collection?
If you run a small business you already know that monthly billing is your company's lifeblood.
The connection between outgoing invoices and incoming cash is a vital one.
It may make the difference between meeting your own monthly expenses and falling behind.
Unfortunately, the process often does not go as smoothly as you would like.
While most of your customers are upfront, honest, and pay on time, there are those who pay late, and there are those who don't pay at all.
What can you do to keep your cash flow moving smoothly? And if someone is late paying what they owe you, what can you do about it? When does the time come to think about hiring an attorney to help sort through this problem? First of all, make sure you are doing everything correctly to help prevent the problem.
Get the basics of your agreement in writing.
This can be in the form of a contract, or even a letter, which explains both the services you will provide and what your customer can expect to pay.
Second, be timely and consistent with your billing.
This sounds simple, but the smaller the company, the more difficult it can be to stay current in billing practices.
A small staff can mean that you are forced to concentrate on producing your product which leaves little or no time to bill for it.
It's great to be busy, but the longer you wait to send a bill, the longer you'll have to wait to receive your money.
Typically, your bills should go out at least every 30 days.
Third, state the terms of payment you expect.
This should be in your initial agreement.
If you expect the client to pay immediately upon receipt of the bill, ensure this stipulation is specifically expressed in the contract or agreement.
If you expect to see your money within 30 days of mailing the bill, that stipulation should be clearly stated in the paperwork.
This can help turn some slow pays into on-time pays, and it keeps your business running smoothly and shipshape.
But there will still be those who don't pay...
what do you do then? The first thing you should be aware of is that debtors have been given some very specific rights by the government.
In 1977, Congress passed the Fair Debt Collection Practices Act (FDCPA).
This act was designed to protect consumers from unfair debt collection practices.
As you make attempts to collect on an account, it's important that you, or your representative, have a very clear understanding of what you may, and may not do.
If you step over the lines to collect your cash, you may find that you have gone from being the injured party to being the offender.
If you've politely contacted the client, billed them on time, sent them late notices, and behaved correctly, then it is probably time to consider the next steps.
If your claim is small enough, you might think about going to small claims court.
It's important for you to do your homework.
Different states have differing definitions for what constitutes a "small claim.
" For example, in the State of Minnesota, where "small claims court" is known officially as "Conciliation Court," a general claim can be as high as $10,000 and a consumer debt claim as high as $4,000.
Other states, however, will only deal with amounts smaller than $1,500.
Do your homework, be informed, and keep yourself out of legal trouble! An advantage to small claims court is that you can file and argue your case without an attorney.
When you go before the judge, you will want to make sure that you have copies of all your contracts, agreements, bills, letters and notices so that you can successfully argue your case.
Despite the fact that you do not need an attorney to represent you, it may well be worth your money to hire a lawyer to look over your case and give you some advice on how to proceed.
A drawback to small claims court is that, in many cases, getting a successful judgment does not mean that you automatically get your money.
The court may find in your favor, but they are NOT a collection agency.
It is still your responsibility to collect what is owed you.
If your client refuses to comply with the judgment of the court, then you have probably arrived at the point where you will need to hire an attorney to help you to legally recover what is owed to you.
Specifically, an attorney with knowledge of collection practices and expertise in dealing in the realm of collections and recovering the outstanding debt.
When you are looking for a lawyer to help you, you want to make sure you chose an attorney familiar with the Federal Fair Debt Collection Procedures Act, well versed in the relevant state collection statutes and procedures, and has experience and success in their collection practices.
As when you hire any professional, do your homework, talk to other clients, and make sure the lawyer you choose is a good fit.
The connection between outgoing invoices and incoming cash is a vital one.
It may make the difference between meeting your own monthly expenses and falling behind.
Unfortunately, the process often does not go as smoothly as you would like.
While most of your customers are upfront, honest, and pay on time, there are those who pay late, and there are those who don't pay at all.
What can you do to keep your cash flow moving smoothly? And if someone is late paying what they owe you, what can you do about it? When does the time come to think about hiring an attorney to help sort through this problem? First of all, make sure you are doing everything correctly to help prevent the problem.
Get the basics of your agreement in writing.
This can be in the form of a contract, or even a letter, which explains both the services you will provide and what your customer can expect to pay.
Second, be timely and consistent with your billing.
This sounds simple, but the smaller the company, the more difficult it can be to stay current in billing practices.
A small staff can mean that you are forced to concentrate on producing your product which leaves little or no time to bill for it.
It's great to be busy, but the longer you wait to send a bill, the longer you'll have to wait to receive your money.
Typically, your bills should go out at least every 30 days.
Third, state the terms of payment you expect.
This should be in your initial agreement.
If you expect the client to pay immediately upon receipt of the bill, ensure this stipulation is specifically expressed in the contract or agreement.
If you expect to see your money within 30 days of mailing the bill, that stipulation should be clearly stated in the paperwork.
This can help turn some slow pays into on-time pays, and it keeps your business running smoothly and shipshape.
But there will still be those who don't pay...
what do you do then? The first thing you should be aware of is that debtors have been given some very specific rights by the government.
In 1977, Congress passed the Fair Debt Collection Practices Act (FDCPA).
This act was designed to protect consumers from unfair debt collection practices.
As you make attempts to collect on an account, it's important that you, or your representative, have a very clear understanding of what you may, and may not do.
If you step over the lines to collect your cash, you may find that you have gone from being the injured party to being the offender.
If you've politely contacted the client, billed them on time, sent them late notices, and behaved correctly, then it is probably time to consider the next steps.
If your claim is small enough, you might think about going to small claims court.
It's important for you to do your homework.
Different states have differing definitions for what constitutes a "small claim.
" For example, in the State of Minnesota, where "small claims court" is known officially as "Conciliation Court," a general claim can be as high as $10,000 and a consumer debt claim as high as $4,000.
Other states, however, will only deal with amounts smaller than $1,500.
Do your homework, be informed, and keep yourself out of legal trouble! An advantage to small claims court is that you can file and argue your case without an attorney.
When you go before the judge, you will want to make sure that you have copies of all your contracts, agreements, bills, letters and notices so that you can successfully argue your case.
Despite the fact that you do not need an attorney to represent you, it may well be worth your money to hire a lawyer to look over your case and give you some advice on how to proceed.
A drawback to small claims court is that, in many cases, getting a successful judgment does not mean that you automatically get your money.
The court may find in your favor, but they are NOT a collection agency.
It is still your responsibility to collect what is owed you.
If your client refuses to comply with the judgment of the court, then you have probably arrived at the point where you will need to hire an attorney to help you to legally recover what is owed to you.
Specifically, an attorney with knowledge of collection practices and expertise in dealing in the realm of collections and recovering the outstanding debt.
When you are looking for a lawyer to help you, you want to make sure you chose an attorney familiar with the Federal Fair Debt Collection Procedures Act, well versed in the relevant state collection statutes and procedures, and has experience and success in their collection practices.
As when you hire any professional, do your homework, talk to other clients, and make sure the lawyer you choose is a good fit.
