Many articles I’ve read on the topic of collections recommend that you write and call the client a number of times and be persistent, increasing your directness and determination gradually. However, I DO NOT recommend writing and/or calling the client more than once. There are precise laws in place that protect a debtor from what can be deemed “harassing” contact. If you contact your client more than twice about an unpaid balance, you risk being sued for harassment, and no bill is worth that.
Give the client until the next statement cycle to respond to your letter. If they have not, call them, but only once. Even if you get a voicemail, I recommend that you leave a message but do not attempt to contact them by telephone again. If you get no response, then you must first determine whether the balance due is worth pursuing further. This is the point where you may begin to incur expenses to collect the debt owed.
If you decide that the unpaid balance is worth pursuing, you have a few options to proceed with:
Turn it over to a collection agency.
Keep in mind that collection agencies will keep 10-50% of anything collected on your behalf. Their primary means of collecting a debt are letters and telephone calls. Personally, I do not think a collection agency is your best option. More or less, they do what you could do on your own, except that they will report the debt to the credit bureau and are willing to risk a more threatening tone with the debtor if necessary.
Take the debtor to Small Claims Court.
To file a small claims case in Missouri, the balance owed to you must be less than $3,000 (this amount varies by state). The Springfield Greene County Small Claims Court will typically cost you less than $100 to pursue a case (between filing fees and service fees) and you can represent yourself. This saves the added expense of hiring an attorney. You will need to have a paper trail to validate the debt before the judge. Your strongest piece of evidence is the agreement you and the client initially signed. However, it is also helpful to have photographs or examples of the services you provided, copies of invoices, and notes from telephone conversations, etc.
Before you can pursue a case in Small Claims Court, you will have to send the client a demand letter. This is a requirement under the Fair Debt Collection Practices Act (FDCPA) and is different from the letter suggesting payment arrangements you may have sent to the client earlier. There are specific legal requirements for a demand letter. Refer to Section 809 of the FDCPA, which lists those requirements in detail.
Typically, if you provide the necessary information to prove that the client owes you money, the Small Claims Court will find on your behalf and there will be a judgment entered against the client. However, it is still up to you to collect the debt. This can be time consuming and difficult, as your options for doing so are limited.
The final part of this article series will cover your third legal option, hiring an attorney.
This article originally published by GreatFX Business Cards, offering free online business card design and eco-friendly color printing.
Always consult with an attorney before pursuing any debt collection strategy. The opinions in this article are not to be taken as official guidance but rather as an informational supplement to your overall debt collection strategy.
Read the Missouri State Bar’s Small Claims Court Handbook.
Read tips on writing a demand letter.