Brief Summary of What You Should Know About Debt Collection Attorneys
As an emerging platform and alternative option to traditional collection companies, here is what you should know about debt collection attorneys. The question isn’t whether to use an attorney or collection agency (the answer is both). The real question is how to use both together to maintain traction all the way through to completion.
A Management Perspective
One of the most important tasks of Senior Management is to grow the revenue of the company. A tremendous amount of resource is devoted to this task. It is not easy in today’s global markets. With all the investment in revenue growth, wouldn’t it be a shame if, when achieved, your infrastructure, particularly the accounts receivable collection process, couldn’t keep up? Wouldn’t it be even worse if the failings of the collections process sabotaged that growth by alienating customers, or squandering much of the incremental profit?
Trade credit has taken center stage lately. New services have emerged to help maximize collections and maintain cash flow. Much of what we’re seeing post 2007 in terms of commercial accounts receivable are higher than normal liquidations, extended payment periods, partial payments, and for the first time ever “temporary” payment plans. These are 60-90 day payment plans with minimal token payments with the intention being the debtor will accelerate to pay off within that time frame or obtain other financing.
The Legal Difference
One advantage of having an attorney collector is in ensuring the debtor sticks to an agreed upon payment arrangement. An agency collector will agree to a payment plan over the phone and simply call the debtor to confirm each payment along the way. These arrangements have a high default ratio. The attorney will secure the payment plan with legal documents such as a release agreement, consent judgment, or promissory note. The default ratio on these is quite low in comparison.
ABCs Are On the Rise – Assignments for the Benefit of Creditors
Distressed companies are using Chapter 11 and Chapter 7 less frequently than in previous economic downturns. Both Chapter 11 and Chapter 7 are expensive and have less predictable outcomes. For these reasons, today more debtors are using “out of court” liquidations as a more cost effective vehicle for closing their company and selling or liquidating their assets. One of the most frequently used tools is an assignment for benefit of creditors (ABC). ABCs are different in each state. A creditor may find it difficult to know what to do in reaction to a notice (if it even receives one) that one of its customers has initiated an ABC. Again, you want your claim in the hands of an aggressive collection lawyer to expedite your recovery.
For more information about what you should know about debt collection attorneys, the hybrid process or specific referrals to a top pre-litigation attorney collector, contact Stevens & Ricci at 888-722-1611.