One of the most difficult jobs of a Debt Collector is dealing with a person who does not feel they should pay the entire debt. Sometimes they feel some parts of the bill were exaggerated or ‘unfair’ to them.
Unfair is a very common word in my conversations. It doesn’t help to resolve anything because it has no legal meaning. I usually reinterpret it as ‘I am not happy that I owe this money!’ Quite frequently the debtor does not understand the contract they signed. Occasionally they feel our Client was intentionally trying to steal their money through ‘bogus’ items in the itemized bill.
The underlying hostility regarding the bill makes it difficult to start. Because of this, I try to ease the tension before I talk about any money. I will let the debtor know of their options including having their day in court, payment plans and settlement offers. I will let them know that need to do what they feel is in their best interest. I then inform them that, while they disagree, what they signed is a legal document, designed to hold up in court. Now, we may be ready to start.
I ask them what they have in mind. At this point it doesn’t matter if they offer ten percent, I just want them to start talking about resolving the situation. I ask them if they can pay all at once or how big their payments would be. I ask a lot of questions to get information, but it also focuses their attention away from being angry at me for suggesting they owe money.
I already have an idea if they are working or own any property so I also know if litigation is a realistic possibility. This is important because, if a debtor has nothing to attach, any settlement produces more money than litigation. Judgments are a piece of paper that say ‘You Win!’ but provide nothing in the way of producing cash.
People who have nothing usually offer lower settlements spread out over longer time periods. If it is the best way to get the most money back from the debt, I will recommend it to my Client. People with Jobs or Houses, on the other hand, need to offer high settlements paid quickly to get my recommendation.
Once we have the ball rolling, my next step is to get the debtor to raise the initial offer to something reasonable. This usually takes a few conversations. In each conversation I try to have the debtor raise the offer. I always lower the counter offer slowly. I am not trying for a fifty percent settlement but something over seventy percent. If the debtor has no job or assets that may not happen but I try for the most I think the Client can expect.
Clients want and deserve all their money. Settlements are not usually accepted with glee. Often, however, a settlement produces more money back to a Client than a successful litigation.
Litigation includes extra costs for court fees, additional commissions for Attorneys working on a contingent basis and are more likely not to be paid than paid unless we have a verified job or home ownership. This means the average Judgment is only good for something less than a Client would receive with a fifty percent settlement. If the debtor has a verified job a settlement of eighty percent would still probably produce more revenue to a Client.
While settlements don’t sound good, they make good sense if the situation is evaluated from a strictly money perspective. I am all about the money and my advice to Clients is always about how they can maximize their returns.