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DON'T BE HAMMERED BY YOUR DEBT

DON'T BE HAMMERED BY YOUR DEBT

Friday, August 25, 2006

UNIVERSAL MYTH - SIZE DOES MATTER

There is a myth prevalent in the collection world, both in the minds of creditors and debtors that some debts are simply too small to be worth collecting. This is a myth. A creditor should never make a determination on whether to proceed with legal debt collection based on the size or amount of the debt. This is simply an irrelevant and inaccurate yard stick to determine whether or not a debt should be sent to an attorney for collection activity. The true measure of whether a debt should be sent to a debt collection lawyer is whether or not it is COLLECTIBLE. A $150.00 debt that is owed by an executive who makes $200,000.00 a year and is based upon a written contract for medical services is imminently collectible and worth $150.00. A debt for $100,000.00 that is based on an open account without a signed contract by a waitress who works at Waffle House is worth nothing because it is not collectible.

This is a difficult myth to overcome, both in the minds of creditors and debtors. I have a medical services provider whose average debt is $150.00. I routinely file hundreds of collection suits for that client each year. Prior to filing the suits, creditor and I make an informed and intelligent decision based upon the debtor's employment, home ownership, and other income and asset factors to determine whether the debt is collectible. If the debt is collectible, I file suit and recover the amount of money owed. If the debt is uncollectible based on those factors, it is written off. Using this method, this particular client has now been able to recover literally tens of thousands of dollars which it had previously simply written off as bad debt. I utilize this same system to determine whether high dollar debts are collectible and will not in good conscience file suit on a large debt for a client that I know beforehand is simply uncollectible regardless of what my potential fee may be. If that the result of this system is that I continuously have to convince new clients that some of their smaller accounts are worthy of suit, and I am called by debtors who are amazed that a creditor has not walked away from a $200.00 debt, but has instead hired a collection attorney. That debtor has done himself a tremendous disservice when he ends up having to pay, not only the $200.00 debt, but also additional filing fees, service of process fees and attorney fees.

3 comments:

Amanda Myers said...

Hi,

Thanks for your wonderful and informative blog. I was beginning to wonder if I was the only one who thought that this "advice" going around the internet about fixing your credit was just horrible. The "sample letters" seemed inaccurate and overboard. And the people out there trying to scam a dollar out of desperate folks trying to fix their credit by offering "repair kits" for money, and the "credit repair services" make my stomach turn.

I'm not sure if you can talk about this in a future blog or not, considering your profession. However, It'd be great to read a Debt Collection Lawyer's thoughts on negotiation of a debt. What are your thoughts on "payment for credit report deletion"? What types of letters make you role your eyes and not even consider negotiation? As a lawfirm, and not a Collection Agency, is it ultimately up to the Original Creditor if a negotiation is accepted? Is there more "negotiating power" for the person trying to negotiate if there is more than one debt with that lawyer/collection agency? I'd be interested to hear your thoughts on this, as it seems that the information that is being passed around is so erroneous.

mark30339 said...

Hello Michael

Perhaps you can elaborate on the details of this:

"Prior to filing the suits, creditor and I make an informed and intelligent decision based upon the debtor's employment, home ownership, and other income and asset factors to determine whether the debt is collectible. If the debt is collectible, I file suit and recover the amount of money owed. If the debt is uncollectible based on those factors, it is written off."

mark30339 said...

Hello Michael.

Perhaps you can elaborate on the details of this analysis:

"Prior to filing the suits, creditor and I make an informed and intelligent decision based upon the debtor's employment, home ownership, and other income and asset factors to determine whether the debt is collectible. If the debt is collectible, I file suit and recover the amount of money owed. If the debt is uncollectible based on those factors, it is written off."