Top Secrets for How and When to Get Tough with a Debtor

By Gini Graham Scott

This book will help you get paid by a debtor who is reluctant to pay or has financial problems. Chapters cover: the five major reasons for non-payment, suggesting alternatives if the debtor can’t pay in full, handling stalls and objections, helping the debtor find money, dealing with disputes and negotiating settlements, responding to bad checks, making the final demand, and how to get tough.

• Language: English
• Publisher: Gini Graham Scott
• Release date: Nov 10, 2009
• ISBN: 9781452392141

Gini Graham Scott

            Gini Graham Scott has published over 50 books with mainstream publishers, focusing on social trends, work and business relationships, and personal and professional development. Some of these books include Scammed (Allworth Press), Lies and Liars: How and Why Sociopaths Lie and How to Detect and Deal with Them (Skyhorse Publishing, Internet Book Piracy (Allworth Press, The New Middle Ages (Nortia Press), and The Very Next New Thing (ABC-Clio). She published a series of books on homicide: Homicide by the Rich and Famous (Praeger Publishing; Berkley Books paperback), American Murder (ABC-Clio), and Homicide: A Hundred Years of Murder in America (Roxbury).             Scott has gained extensive media interest for previous books, including appearances on Good Morning America, Oprah, Montel Williams, CNN, and hundreds of radio interviews. She has frequently been quoted by the media and has set up websites to promote her most recent books, featured at www.ginigrahamscott.com and www.changemakerspublishing.com.              She has written, produced, and sometimes directed over 60 short videos, which are featured on her Changemakers Productions website at www.changemakersproductions.com and on YouTube at www.youtube.com/changemakersprod. Four of her feature films, which are in release or have distribution arrangements, deal with social issues and crime.              Scott has a PhD in sociology from U.C. Berkeley and MAs in Anthropology, Pop Culture and Lifestyles, Mass Communications and Organizational/Consumer/Audience Behavior, and Recreation and Tourism from Cal State, East Bay. She has most recently received an additional MA in Communications in 2017.

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Top Secrets for When and How

to Get Tough with a Debtor

by Gini Graham Scott, Ph.D.

Author of a Dozen Books on Work and Professional Development, including Disputes, Disagreements, and All Out War and

A Survival Guide for Working with Humans

www.ginigrahamscott.com

Smashwords Edition

Copyright 2009 Gini Graham Scott, Ph.D.

Discover other titles by Gini Graham Scott at Smashwords.com

Smashwords Edition, License Notes

This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person you share it with. If you're reading this book and did not purchase it, or it was not purchased for your use only, then you should return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.

Credit: Cover Photos by... Image 1 - Real4to, Fotolia, Image 2 - Dmitri Mikitenko, Fotolia, Image 3 - Dusaleev V., Fotolia

TABLE OF CONTENTS

INTRODUCTION: THE DIFFICULTY OF COLLECTING DEBTS

The Credit-Collections Connection

How This Book Will Help You

ABOUT THE AUTHOR

CHAPTER 1: ADAPTING YOUR APPEALS TO THE DEBTOR

Suggesting Alternatives if the Debtor Can't Pay in Full

Taking Extra Steps to Get Your Money

CHAPTER 2: DISCUSSING THE BILL WITH THE DEBTOR

The Five Major Reasons for Non-Payment

Finding Out About the Debtor

CHAPTER 3: HANDLING STALLS AND OBJECTIONS

The Right Attitude

Preparing to Respond

Dealing with Stalls

CHAPTER 4: DEALING WITH OBJECTIONS

The Debtor Claims Payment Is Impossible Because of Financial Problems

The Debtor Claims to Have Longer Payment Arrangements than You Expected or Agreed Upon

The Debtor Claims that an Error in Processing Your Bill Has Delayed Payment

The Debtor Claims that Someone Else is Responsible for Paying the Bill

The Debtor Has Died

CHAPTER 5: HELPING THE DEBTOR TO FIND MONEY

Sources of Funds for Making Major Payments

Sources of Funds for Making Regular Payments

Other Possibilities

CHAPTER 6: DEALING WITH DISPUTES AND NEGOTIATING SETTLEMENTS

Some Guidelines for Discussing the Problem with the Debtor

Resolving Specific Complaints and Grievances

Coming Up with Your Own Solutions

CHAPTER 7: DEALING WITH BAD CHECKS

Checks With Errors

Unintentionally Bounced Checks

Major Reasons for Bad Checks

Responding to Bounced Checks

Waiting for the Debtor's Response

What to Do If You Suspect Poor Intent or Fraud

How to Get Tough

CHAPTER 8: MAKING THE FINAL DEMAND

Arriving at the Final Demand Stage

No Going Back

Types of Demands

Making a Preliminary Demand

Some Preliminary Demand Letters

The Short Collection Message or Memo

The Mailgram, or Messengered Letter

How Long to Wait

Making a Final Demand

Waiting for the Debtor's Response

CHAPTER 9: HOW AND WHEN TO GET TOUGH

When to Get Tough

Your Four Options

RESOURCES AND REFERENCES

OTHER BOOKS BY THE AUTHOR

AUTHOR CONTACT INFORMATION

INTRODUCTION: THE DIFFICULTY OF COLLECTING DEBTS

For many people, the process of successfully collecting debts is fraught with conflict and uncertainty. You ask for the payment you have coming, the debtor gives you an excuse, and you don't know what to say next. Is the excuse really true? And even if it is, how do you convince the debtor to pay you?

Many creditors give up on collecting debts before they should because they fear the debtor's ill will. Some stop trying because they assume the debtor is a won't-pay deadbeat who has no money, when this is not the case. Still others give up because they aren't aware of the legal remedies available to them, and don't know how to show the debtor they are really serious.

On the other hand, some creditors become so emotionally involved and pursue their debt so energetically that they may end up owing the debtor money when the debtor sues for libel, slander, harassment, theft, assault, extortion, or other illegal collection practices.

If you want to collect the money people owe you, you need to know the rules of the collection game; then you can be creative within these general guidelines. Indeed, in many instances, it is necessary to be resourceful; you will be competing with other creditors for payment from a debtor who doesn't have enough to pay everyone, or who uses a priority system to pay the more important debts first. In that case you have to find a way to make your claim come to the top of the pile—or perhaps look for non-monetary alternatives to getting paid.

Of course, collecting what you are owed is only half the story. The other half involves taking preventive measures in advance to protect yourself from collection problems. Depending on circumstances, these measures can range from writing up effective loan agreements to making decisions about when to extend credit and to whom. A strong credit policy will help you decide under what circumstances you will extend credit—and how much you will risk.

The Credit-Collections Connection

Anytime you make an exchange with anyone and don't immediately get cash, you are extending credit. And that includes working for someone, accepting a check (in reality a promise to pay), billing someone for a product or service, or making a loan.

If you think about it, you'll realize that every society operates on some form of credit. Even a simple society that uses barter instead of money incorporates a credit system. Say a person performs some activity for another, such as working in a field sharing food from a hunt. That activity establishes a debt whereby the other person is expected to perform some reciprocal action in return--perhaps doing work in the future or sharing later from his own supply of food.

Thus, credit is, in a sense, the grease that keeps the wheels of society moving. Credit facilitates relationships: not every transaction can be immediately concluded with a payment in money, services, or products in return. But because the parties to a transaction agree or expect that reciprocal activity or payment will occur at or by a certain time, they can proceed with their current business, trusting that they will get paid.

In any situation where you extend credit, you have to determine an acceptable risk level. You must also realize that you are making a trade-off between your investment of time and energy in the transaction and your expectation of getting paid. In effect, there is a trade-off between sales and credit; if enough people refuse to buy from you without credit, your conviction that you are saving money by refusing credit to your customers may come back to haunt you.

Extending credit can indeed increase the likelihood of making a sale. But the very act of extending credit brings with it a measure of risk--however small--that payment will not be forthcoming. Accordingly, you must weigh the value of making a transaction that can increase your business, help a friend, or strengthen a relationship with the possibility that you will not receive the expected payment.

Being too conservative in extending credit can lose you sales (or even damage some of your personal relationships, though personal borrowing is not the province of this book). On the other hand, being too liberal can create severe financial problems for you and possibly lead to a business or personal bankruptcy if you don’t get paid. You must strive for a balance that works for you and decreases your risks by maximizing the chances that you will effectively collect the money people owe you.

How This Book Will Help You

This book is designed to help you collect this money in two ways.

First, it will help you establish a good credit policy so you can make the best decision about whether to extend credit (in the form of money, work, or sales).

Second, it will help you determine exactly what to do when you have problems collecting after you have extended credit.

Secrets for When and How to Get Tough with a Debtor takes into consideration that your strategies for extending credit and collecting will differ depending on the debtor's individual characteristics and personality. The book also deals with the legal niceties of what you can and cannot do when you try to collect--so you don't end up owing more than you're owed.

While this book is designed especially for the small business person owed a small amount of money (up to about $5,000, which is the limit on small claims cases in many courts) individuals or business people who are owed much more should find the basic principles and strategies discussed in this book useful as well.

ABOUT THE AUTHOR

Gini Graham Scott, Ph.D. is the author of over 50 books and a seminar/workshop leader, specializing in work relationships and professional and personal development.

She has written a dozen books on work relationships, achieving your goals, and enjoying your work and life more, including: Want It See It, Get It!, Enjoy! 101 Little Things to Do to Add Fun to Your Work Everyday, A Survival Guide for Working with Humans, A Survival Guide for Working With Bad Bosses, A Survival Guide to Managing Employees from Hell, and Disagreements, Disputes, and All-Out War – all from AMACOM. A number of her books have dealt with management topics, including: Work with Me! Resolving Everyday Conflicts in Your Organization (Davies-Black) and Building a Winning Sales Team (Probus).

She has a Ph.D. in Sociology from the University of California at Berkeley, and MAs in Anthropology, Mass Communications and Organizational/Consumer/Audience Behavior, and Popular Culture and Lifestyles at Cal State East Bay.

She has gotten extensive media interest in her previous books, including appearances on Good Morning America, Oprah, Montel Williams, CNN, and hundreds of radio interviews. She has been frequently quoted by the media and has several Web sites for her books on improving work relationships and professional success, including:

-Enjoy! 101 Little Ways to Add Fun to Your Work Everyday (www.enjoythebook.com),

-Want It, See It, Get It (www.wantitseeitgetit.com),

-Disagreements, Disputes, and All Out War, A Survival Guide for Working with Humans (www.workingwithhumans.com),

A Survival Guide to Managing Employees from Hell (www.workingwithhumans.com),

-A Survival Guide for Working with Bad Bosses (www.badbosses.net)

The site featuring her books and speaking on work generally is at www.workwithgini.com. Her overall workshop is at www.ginigrahamscott.com.

CHAPTER 1: ADAPTING YOUR APPEALS TO THE DEBTOR

The appeals process described in the previous chapter is a typical approach used by professional collectors in dealing with most debtors. You seek payment in full, and you use increasingly intense appeals to motivate the debtor.

However, at times you need to vary your approach to deal with certain circumstances. For example, if you think the debtor may be having problems paying in full, you can suggest that you are open to an alternate payment arrangement. Another possibility is to develop a creative payment program where the debtor pays you in merchandise or services, or pays you by continuing to buy needed products or services from you, but adds a little bit extra to pay off the past debt. Then, too, if the debtor has failed to follow through in paying you through the usual channels (such as sending a check by mail), you may need to show you are willing to take extra steps to make it easier for the debtor to pay.

The following chapter describes these methods of adapting the appeals process. You can also be creative and devise other strategies to suit your situation.

Suggesting Alternatives if the Debtor Can't Pay in Full

Although it's preferable to request immediate payment in full in your first appeal and leave it up to the debtor to request other terms, at times a debtor may be too embarrassed to admit to financial problems.

If you suspect