How to Collect Money Owed to You
Does someone owe you money? Have you been waiting in vain for a bill to be paid or a debt settled?
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Presumably, if you are at the point of having to search on the internet for ways to collect money that you're owed, you are already fed up and want to know what steps to take next. Steps which don’t involve becoming a stalker or making threats to break people's legs, which believe it or not is illegal. This article outlines the debt collection strategies that are available to you. |
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Evaluate Your Evaluation
Before going any further with these debt collection strategies, you need to look at this from a clear perspective. Have you given the debtor enough time and notice to repay the debt that they owe you? You would not want to ruin a personal or business relationship with someone due to you being too hasty and unreasonable with collecting outstanding bills.
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Contact the Debtor
There could be some fairly legitimate reasons for why you have not yet been paid.
It is crucial that you attempt to contact the debtor directly before starting any legal procedures and suing for money owed. If you can’t meet in person, pick up the phone and make a call. This will be far more effective than sending a letter.
Maintain a friendly and calm attitude. Getting into an argument and having the debtor be angry at you could just make it more difficult to collect the outstanding bills. Do not let them negotiate a price, and if they offer to make a partial payment, make it clear when you expect the remaining balance. |
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Still No Luck?
If you still have not been able to collect the debts after various requests and past due dates, it is time to send a very serious and formal letter.
When sending the letter, remember to do the following:
- Include names and addresses of people involved.
- Include copies of contracts and other paperwork relating to the debt.
- Give a very final date for which payment can be made by.
- Offer the chance for the debtor to put in writing any disputes they have with your claim.
- Give a notice that if you do not receive the payment, you will be taking the matter further, i.e. suing for money owed at small claims court.
- Send the letter via registered mail and photocopy all documents.
- Do not be abusive or make threats. It is important to stay within the law.
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Contracts
If you get to this point and you realize that you never made a contract with the debtor, then you're limited with your debt collection strategies and there isn’t a whole lot more you can do. If you have some other type of evidence to show that you are owed this money, i.e. an e-mail from the debtor acknowledging the debt, you may be able to use this to prove your case instead of a contract.
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It is always a good idea to keep copies of letters and emails that are sent and received regarding business matters.
If you have none of this, there is very little chance that you will get the money back, and you will have to take it as a lesson learnt. The lesson being, always go into a business deal with a contract stipulating terms and payment amount. |
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Small Claims Court
If you have completed all of the steps outlined above, you have the necessary proof to show that this money is owed to you, and you feel it is time to take this to small claims court:
- Taking the matter to small claims court is actually quite simple. Contact the court in your area to ask for the needed paperwork to file a claim.
- You can find the courts in your state by typing in “small claims court” along with your state, in a Google search.
- Once filing the paperwork, ensure the debtor is served, and then wait for the court to set a date. The filing fee should be less than $50
- You do not need an attorney when suing for money owed in small claims court.
- Be aware that each state has a different maximum claim amount. Usually less than $7.500.
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Mediators
Another debt collection strategy is to use mediators instead of going to small claims court. A mediator is a proffesional, hired in order to settle a dispute outside of court. They may make it easier for an agreement to be reached, however, this must be reached voluntarily between the two parties and so is not always effective. Google search “mediators” along with your city, for a list of mediators in your area. |
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Debt Collection Agencies
These are third party companies that you can pay in order to pursue money owed to you. Some debt collectors will charge up to 50%, and will only take your case if it offers a good chance of success. There are many debt collectors listed on the web.
One thing to note is that even if you have taken your case to small claims court and won, you will still be responsible for having to collect money that you're owed, and may still have to hire a collection agency. |
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