Collection Policy, How much is too much?

Quote:

Posted By MelissaP1 on 06/30/2014 10:55 PM
What do you mean by the Letter of Collection of like over 1K? Is that foreclosure of a lien? Just curious what that references.

First off, you need to have a time limit in place before putting the policy into place. That means payments must be paid by the 15th of the month or be considered late. Then you figure in the late charge. Which is either listed in your documents or dictated by state law. Ours was $20 fee on late fees. Later we added interest on to that when we placed a lien. The interest rate is also in your documents or by state law. Which is usually less than 6% or something above the prime rate. You have to be careful of what the law considers "loan sharking" rates.

A good rule of thumb is to follow the bank's lead. That's usually the costs of a returned check. Which is what your entitled to for your expenses back used for collections. A court can ONLY make you "whole" it does not give you a profit and looks only at the costs out of pocket it took to collect. Those are usually the filing/legal fees and expense of collection.

We had a 6 months we liened policy in place. After a year we would VISIT the idea of a foreclosure. There are soo many issues related to foreclosure that one should be in no hurry to go into foreclosure. Plus one can not foreclose on those active military persons or homes being foreclosed on by the bank.

I advocate avoiding lawsuits as a means to collect. Liens have more power to them as they keep the owner from selling until they pay what is owed. It also accumulates over time. A lawsuit does not accumulate and the person can sell without paying the judgement. Once gone, it is much harder to track down and collect.

So put in a time limit so it's not looking like your picking and choosing. Start by giving those notice that already qualify at this point for the time limit by granting maybe a 3 month lienency policy until fully deployed. That way those interested in paying have a chance to work out payment plan. Plus weeds out those who won't. Good luck and a good start!