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Any Small business owners have experience hiring collection agency to collect money o
Old 03-04-2016, 12:18 PM   #1
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Any Small business owners have experience hiring collection agency to collect money o

Are there any small business owners/managers in this forum that may have had experience dealing with a collection agency to collect money owed to your business by a customer?

Here's the situation I'm dealing with: We own a hotel in Missouri and had a contractor from Florida who brought his crew to work on a contracted job they had in the area. The crew of that contractor stayed at our hotel. Initially they were paying the hotel room rent on a weekly basis with a credit card. After 2-3 weeks they requested a direct billing arrangement to be set up. Hotel was to bill the contractor for the crews' stay each week and the contractor agreed to will mail the check on friday along with the paychecks for their crew.

Unfortunately the contractor did not mail the payment as agreed. After 1st week's bill when the payment did not come thru their excuse was that the accountant screwed up and will sent two weeks' payment after the 2nd week. At the end of the 3rd week when the payment for the prior two weeks wasn't received we demanded full payment. They in turn decided to skip out to a different hotel.

The three weeks' lodging bill was in excess of $15K. Repeated bills, reminders and phone calls from our hotel staff were all ignored. Finally when the account was over 90 days old we decided to send it for collection on October 1, 2015. We telephone interviewed several collection agencies and found it interesting that most all but two of them were from Dallas TX, the other two were from Orlando FL. We contractor with one of the agencies who claimed to "Collection Company" having attorneys on staff and claimed to have the highest collection rate in their area.

Unfortunately, we have not seen any money collected in the past 5 months and today I get an e mail from the collection agency that states "we have been working collections for you. These guys are professional debtors and do this type of stuff everywhere they go. They know how to play the system and I think that if we show them that we are serious about filing suit against them that will light the fire we need to motivate them.I want to lite a fire and File suit against the debtor and his company. Its 800 dollar court cost and the rate will go up to 40%, Our attorney will sue him and he will have no choice but to pay. The judge will see in you favor for sure, Iím sure it wonít go that far because as soon as he sees that he is being sued he will do whatever to make it got away. He is still in bizz but heís only paying the people he has to pay and thatís the people he needs something from or has leverage on him. I think this is the only way you will get paid."

I hate to throw good money ($800) after bad at this point. Does anyone have any experience dealing with a collection situation like this? Please feel free to PM me at your convenience. I appreciate any help/guidance you can extend.
Thank You!
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Old 03-04-2016, 12:29 PM   #2
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Has this agency said how much they would pay you to purchase the debt from you? That might be an alternative, particularly if you can deduct the loss against income.
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Old 03-04-2016, 12:35 PM   #3
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My view would that they are a collections agency... they have tried to collect and have failed.

What do they bring any expertise to the table in managing the claim through the courts that is worth 40% of what is collected?

Now you can engage a lawyer experienced in this sort of claim and file suit against the debtor but if you go that direction you'll be responsible for any lawyer or court costs (unless the lawyer is willing to take it on contingency). Talk with your lawyer as to your best options.
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Old 03-04-2016, 12:48 PM   #4
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My view would that they are a collections agency... they have tried to collect and have failed.

What do they bring any expertise to the table in managing the claim through the courts that is worth 40% of what is collected?

Now you can engage a lawyer experienced in this sort of claim and file suit against the debtor but if you go that direction you'll be responsible for any lawyer or court costs (unless the lawyer is willing to take it on contingency). Talk with your lawyer as to your best options.
Thank you pb4uski!
I did that. The litigation costs are pretty high. Haven't found a lawyer who will file suit in Florida on a contingency basis. Will keep trying to find one . Really appreciate your advice.

Best Regards,
Rick
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Old 03-04-2016, 01:21 PM   #5
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Has this agency said how much they would pay you to purchase the debt from you? That might be an alternative, particularly if you can deduct the loss against income.
GrayHare:

That's an excellent idea! I will ask him next week when I speak to the collection agent.

Thanks a bunch,
Rick
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Old 03-04-2016, 03:04 PM   #6
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Just based on the poor English in the collection agency's message I would drop them cold right now.
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Old 03-04-2016, 03:30 PM   #7
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Just based on the poor English in the collection agency's message I would drop them cold right now.
I agree with this and would look for another agency.
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Old 03-04-2016, 03:35 PM   #8
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I agree with this and would look for another agency.
Thanks Michael and Braumeister. You have a valid point!

Have a great weekend,
rick
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Old 03-04-2016, 03:44 PM   #9
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One additional comment. My experience with accounts receivables and collections is considerable but dated and based in another country, so it may not apply. With small business collections, the agencies tended to collect quickly or not at all, and were very good at assessing how much a debtor could pay. 5 months is a long time for no results.
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Old 03-04-2016, 05:29 PM   #10
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Our attorney will sue him and he will have no choice but to pay.
From what I've heard, it doesn't work that way.

You can sue them, and the judge can say "Yes, they owe $X to you". But then you have to collect. That's where you are now.

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Old 03-04-2016, 06:44 PM   #11
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Just based on the poor English in the collection agency's message I would drop them cold right now.
Some of the best debt collectors in the movies speak broken english.
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Old 03-04-2016, 07:14 PM   #12
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If you know where the project they were working on is located, and it is a single property as opposed to new gutters on 250 new houses or something like that that involves many parcels, ask your lawyer if filing a lien on the parcel would be of any use.

Might be more trouble, but it won't hurt to ask.
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Old 03-04-2016, 07:21 PM   #13
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If you know where the project they were working on is located, and it is a single property as opposed to new gutters on 250 new houses or something like that that involves many parcels, ask your lawyer if filing a lien on the parcel would be of any use.

Might be more trouble, but it won't hurt to ask.

Or hire the contractor to do $15000 of work, then don't pay.


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Old 03-04-2016, 07:52 PM   #14
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One additional comment. My experience with accounts receivables and collections is considerable but dated and based in another country, so it may not apply. With small business collections, the agencies tended to collect quickly or not at all, and were very good at assessing how much a debtor could pay. 5 months is a long time for no results.
+1 agree. If they do not pay within 90-120 days it is highly improbable that you will be successful in collecting.

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Originally Posted by ERD50 View Post
From what I've heard, it doesn't work that way.

You can sue them, and the judge can say "Yes, they owe $X to you". But then you have to collect. That's where you are now.

-ERD50
That's true....we are unable to collect and most likely won't even if we get a judgement against them.

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If you know where the project they were working on is located, and it is a single property as opposed to new gutters on 250 new houses or something like that that involves many parcels, ask your lawyer if filing a lien on the parcel would be of any use.

Might be more trouble, but it won't hurt to ask.
They were working for an electric utility company. I understand the utility company has terminated the 2 year maintenance contract they had awarded to this contractor after just 6 months.

I appreciate all your input and advice. Seems like the best course of action would be to sell the debt to the collection agency at a loss since they seem so confident in their ability to collect after a lawsuit.

Best Regards,
Rick
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Old 03-04-2016, 08:51 PM   #15
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...

I appreciate all your input and advice. Seems like the best course of action would be to sell the debt to the collection agency at a loss since they seem so confident in their ability to collect after a lawsuit.

Rick
I think you are right. So call their (the collection agency's) bluff. Offer to sell the debt to them for 60% minus $800, since they claim, that at that point:

... he will have no choice but to pay. The judge will see in you favor for sure, ... as soon as he sees that he is being sued he will do whatever to make it got away.


They are so certain, let them bet with their money! Let them make it 'got away'!

-ERD50
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Old 03-04-2016, 09:46 PM   #16
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So call their (the collection agency's) bluff. Offer to sell the debt to them for 60% minus $800, since they claim, that at that point:

... he will have no choice but to pay. The judge will see in you favor for sure, ... as soon as he sees that he is being sued he will do whatever to make it got away.


They are so certain, let them bet with their money! Let them make it 'got away'!

-ERD50
+1 Thank You ERD50
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Old 03-04-2016, 10:29 PM   #17
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....They were working for an electric utility company. I understand the utility company has terminated the 2 year maintenance contract they had awarded to this contractor after just 6 months. ....
While I doubt that anything would come of it, it might be worth contacting the utility and explain that their contractor stiffed you for $15k in services and see if there is anything that they can do to help. Since you are both local and they have a strained relationship with the out-of-state contractor, if they owe that contractor money they might be willing to tell them that they (the contractor) needs to settle its bills with the locals before the utility will pay them or that they need to assign some of the amount the utility owes the contractor to you.

I know if I had an out-of-state contractor that I owed money to and was on the outs with and one of my customers was owed money by that contractor that I would gladly rattle their cage to help out one of my customers.

Can't hurt to make a call and see what is possible..... especially if you know somebody at the electric utility.

Also, call your state AG's office... the contractor may be able to be charged with a felony for theft of services. If that is possible then that should get their attention.

http://www.moga.mo.gov/mostatutes/st...000000302.html

Quote:
570.030. 1. A person commits the crime of stealing if he or she appropriates property or services of another with the purpose to deprive him or her thereof, either without his or her consent or by means of deceit or coercion.

2. Evidence of the following is admissible in any criminal prosecution pursuant to this section on the issue of the requisite knowledge or belief of the alleged stealer:

(1) That he or she failed or refused to pay for property or services of a hotel, restaurant, inn or boardinghouse;.....

(3) That he or she left the hotel, restaurant, inn or boardinghouse with the intent to not pay for property or services;....

3. Notwithstanding any other provision of law, any offense in which the value of property or services is an element is a class C felony if:

(1) The value of the property or services appropriated is five hundred dollars or more but less than twenty-five thousand dollars....
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Old 03-05-2016, 12:15 AM   #18
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Yes try to call the collection agency's bluff. If they don't take it on then you will know they are trying to squeeze something out of you since they have not been successful in collecting the debt.

Admittedly not knowing all the details if the above does not work out, I suggest a couple of things which may take some research on your part.

1) Find out everything you can about this contractor.

2) Call the Florida court system and talk to the Clerk of Court (in his jurisdiction) about steps required for you to get a judgement against this contractor. You may be able to go to court yourself (after you have notice served to him - which the court clerk should be able to do) present your facts to a judge and get a lein or judgment against the assets of the contractor. If you feel more comfortable with a lawyer doing it, have the lawyer do it. This judgement will stay on his credit report or the credit report of his company until he pays you. It will affect him anytime he goes to a bank to borrow money, buys a car, etc. (or until he goes bankrupt)

3) Call the Florida State Board of Contractors, get his license number and file a complaint.
That ought to mess his license up a bit. In the very least have a conversation with the State Board about what your options may be.

4) Call the Better Business Bureau and file a complaint against his company. They typically have 2 weeks to respond to a complaint. He probably is not a member but in some cases it doesn't matter. This is to protect others from him.

In other words, make his life miserable. If I can think of anything else…I will post again.
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Old 03-05-2016, 07:51 AM   #19
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I know if I had an out-of-state contractor that I owed money to and was on the outs with and one of my customers was owed money by that contractor that I would gladly rattle their cage to help out one of my customers.

Can't hurt to make a call and see what is possible..... especially if you know somebody at the electric utility.

Also, call your state AG's office... the contractor may be able to be charged with a felony for theft of services. If that is possible then that should get their attention.

Section: 570.0030 Until December 31, 2016--Stealing--penalties. RSMO 570.030
pb4uski, Thank you for the link. I will call the utility company and see if they can help. Will surely get hold of attorney generals' office.
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Old 03-05-2016, 07:57 AM   #20
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Yes try to call the collection agency's bluff. If they don't take it on then you will know they are trying to squeeze something out of you since they have not been successful in collecting the debt.

Admittedly not knowing all the details if the above does not work out, I suggest a couple of things which may take some research on your part.

1) Find out everything you can about this contractor.

2) Call the Florida court system and talk to the Clerk of Court (in his jurisdiction) about steps required for you to get a judgement against this contractor. You may be able to go to court yourself (after you have notice served to him - which the court clerk should be able to do) present your facts to a judge and get a lein or judgment against the assets of the contractor. If you feel more comfortable with a lawyer doing it, have the lawyer do it. This judgement will stay on his credit report or the credit report of his company until he pays you. It will affect him anytime he goes to a bank to borrow money, buys a car, etc. (or until he goes bankrupt)

3) Call the Florida State Board of Contractors, get his license number and file a complaint.
That ought to mess his license up a bit. In the very least have a conversation with the State Board about what your options may be.

4) Call the Better Business Bureau and file a complaint against his company. They typically have 2 weeks to respond to a complaint. He probably is not a member but in some cases it doesn't matter. This is to protect others from him.

In other words, make his life miserable. If I can think of anything elseÖI will post again.
Sheehs1, Excellent points. My attorney is also the prosecuting attorney for our county. Hopefully, he can help me out with this situation. I will surely follow up on your advice
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