How to collect a small debt?

[Liz Schmidt]

A customer owes me $182 for a product she purchased on our 2-payment plan (her charge card was declined on the second payment, which was 30 days after the first went through).

I've sent emails, a letter, and made phone calls, all with no reply. She is not local so I can't send someone to her house, and I'm sure I can't afford a lawyer to try to get that amount from her.

Does anyone know something else I can do to collect that doesn't take a lot of time and money?

Thank you!

Liz Schmidt
www.organicandhealthy.com

[Lorraine Ball]

There are many colletoin attornies who will work on a contingency basis, but take 40 - 50% And usually they only work locally.


It hurs, but sometimes it is more cost effective to just write it off, and find your next customer.

[Kimberly Porrazzo]

I'd go online and find a collections person in her local area. It's worth getting at least half of what you would have (per Lorraine's comment below), rather than nothing at all. I'd also send some sort of official letter saying that you're sending her account to collections and will report it to the major credit bureaus. Did you contact the credit card company? If you can provide that she obligated herself to the purchase, they may reinstate the charges on her account. Man, how do people live with themselves?

[Tina Womack]

Another idea would be to charge her card around a payday. Most people get paid on Fridays or the 5th and 20th of each month. Just an additional idea :)

[Julie Diebolt Price]

I'm starting the process to collect $1,900 that a company agreed to return to me in November. I've sent a Demand Letter, certified, with a receipt. That starts the Small Claims process and probably the formal Collections process also. I believe that a Small Claims court case will hold more power if the company goes bankrupt. However, I am also checking into the Collections process. I hate to lose 25% or more through Collections, but am not sure filing the case in Las Vegas (where the company resides and where I signed up) won't eat up 25% in travel and other costs (I live in California) to win the case.

In your case, a collections agency seems like the best way to go, rather than Small Claims. Even if you can get 1/2 your money back, it would be worth it. They do all the work while you get on with making a sale to replace that loss.

[Marianne Becker]

You wouldn't happen to have Pre-paid Legal would you? I know that their Lawyers can send a "nasty gram" to the company and sometimes that gets the ball rolling.

[Lorraine Ball]

It doesn't hurt, but my deadbeat client: Turning Point Auto Agents - http://www.gotpaa.com/ simply ignored the letter.

[Kathleen Gage]

That is a great question Liz. For the amount it may actually be more trouble than it is worth. Rarely do I have people who will not pay me. When it happens, it is so frustrating in that I know I my products and services are of very high value. And it is a trust issue.

I have a woman who still owes me $500 for some teleseminar training she went through. I made special arrangements for her (against my gut level feeling). She assured me she would pay as agreed upon and when it came time for the second payment of $100 she informed me her credit card was no longer good. She also assured me she would get me a new number within a couple days. That was well over six months ago.

The thing that most people who go south on their bills don't realize (or don't want to realize) is that there may be other people in the chain of command who are being affected by their lack of payment. In my case, I have a business partner who was supposed to get 50% of the payment. Sadly, her husband is disabled and every dollar counts.

I tried emails, calls, and letters. The woman who owes me the money continues to give excuses. Unfortunately, what people who do this type of thing don't seem to realize is that when they burn us for any amount it can have a big impact on the bottom line.

Often the people that will not pay their bills are the very people who are struggling in their own business. Hmmmm, wonder if karma is at work here.

Actually, what I believe to be true is it is an integrity issue. In the 14 years I have had my business I have had this happen twice.

For some people, they make it a habit to buy goods and services with no intention of paying. Years ago I ran a career development company. We would actually run credit checks on people before putting them on a payment schedule for the training we did. We would not extend credit to C and D credit people. The reason being is for some people it is simply a way of life not to pay their bills.

Granted, there are situations in which people fall upon hard times. However, with people who normally pay their bills they have enough integrity to at least make arrangements and not avoid calls, letters, emails and any other form of communication.

Again, I believe it to be an integrity issue and hope that people who burn vendors for services and products rendered actually realize they are stealing. Simple as that.

As I mentioned in the beginning of this message, you have to determine if the amount of effort you put into trying to get payment is worth it. As in the world of poker, it reaches a point where we are using good money to chase after bad.

Kathleen Gage
The Street Smarts Marketer
www.streetsmartsmarketing.com

[Lorraine Ball]

Integrity is huge.. The only bill i have written off is for $750, and that is a big invoice for me to a woman who repeatedly promised, and begged me to keep working on a project, which i did against my better judgement.

Warning - if someone starts to slow play, slow down on work.

I hadn't thought about contacting the credit card company. That is a good idea.

[Kathleen Gage]

We had a credit check company, not the credit card company, that we used for a client's credit history. There is a fee involved, but depending on the amount of money you loan it may be well worth it.

Kathleen Gage

[Paul Napolitano]

Hi Liz,

I think you should be grateful that it is only $182 that is delinquent. My suggestion is to chalk
it up as a learning experience that you will never extend credit or payment plans to anyone;
full payment must be made before product is received. Period. The negative energy you expound
chasing this amount of money is not worth it. It will drag you down, put you in a negative frame of my
mind, waste your time and cloud your focus on staying positive. Better to spend time on things you
can build upon.

Best regards,
Paul

[Kathleen Gage]

I agree about the energy one uses on something like this. In my case, I do have payment schedules depending on the service rendered. With some trainings I do, to not extend credit would not be a wise choice. I cannot base a decision to do (or not do) something based on one bad apple.

However, my instinct is usually the best guage of all.

With the type of work I do, I have made it a policy to not sell my services to those who appear desperate or think what I teach them will be a fix for all that ails them. Some of my services require a longer selling process than others. I can usually tell in the first conversation if someone is a good fit or not. With the woman who still owes me $500, if I would have listened to my gut I would not be owed the $500.

With smaller items, like my eProducts, I am often not involved in the transaction since it is all automated.

Kathleen Gage

[Julie Diebolt Price]

After reading the discussion, this prompted me to send a Money Request through PayPal, which I had not done. Perhaps the debtor is willing to charge the amount owed to me onto her credit card.

I did my due diligence on this $1,900 investment with referrals that were provided. It is getting more difficult to trust people to do the right/ethical things in business.