Collection Stories

Collection Agency Horror Stories

Business Debt  |  9 min read

Debt collection can be the stuff of nightmares for many business people.

Chances are, your receivables have kept you awake far more nights than fear of a zombie apocalypse or of chainsaw-wielding maniacs. Debt is terrifying, because it’s real life. (Even more so than those other things.)

After working in the industry for more than two decades, I’ve witnessed several real-life horror stories. And it seems timely to share a few. So brace yourself — the names and situations have been changed to protect those who have been traumatized enough:


Story 1: The Turn of the Sue (NEW)

Miles Jessel was a seasoned operator of a marine shipping and import company. So when a customer defaulted on payment for a series of sizable orders as well as freight, demurrage and other fees, Miles felt he knew what to do. 

Miles sued.

At a time when the harbour town’s provincial courthouse was clogged by an unprecedented string of similar defaults and a growing spirit of litigiousness, it came as no surprise the matter would not be processed speedily. Miles hired a senior litigator with a reputation for success in import-export cases, with full confidence things would eventually resolve in his favour. 

After multiple delays, it was three years less a day when Miles finally appeared in Provincial Court. His losses from this case compounded with several smaller ones had by then inflicted serious wounds upon his business, and he had been forced to leverage much of his equity to remain afloat until the trial. 

The day did not go so favourably for Miles. Although his case was initially strong and forcefully presented, the defense attorney had come armed with a litany of disputes and allegations designed to stir doubts in the trial judge’s mind. She was an artisan of prose, painting Miles as an import huckster and her client as his unwitting victim who had suffered serious losses as a result of poor documentation and an abundance of goods either damaged or lost in transit through the importer’s negligence. Miles’ prizefighting lawyer was soon on the ropes.

There was hope, as Miles’ attorney perceived multiple errors in the judgment. But the plaintiffs were denied again at the Court of Appeal, and after much more waiting and investment, Miles lost and was granted hearings at the Superior Court, then finally the Supreme Court. Over the interim, Miles cut his staff and stripped his business to its core in order to weather the protracted recession and make good on his legal fees. At last, seven years after he had vowed to sue, Miles was awarded the judgment. 

But it was not to end quite yet. Miles laboured to collect on his judgment for a further nine of the ten years allowed to him by law. On the tenth and final year, he conceded and delivered the file by hand to the town’s collection agent.

The agent sifted through the reams of documentation with uncertainty, but accepted the account. Within just a few days, he paid a visit to Miles. 

“I have sad news, as well as tragic news,” he said, holding his hat over his chest.

“Let us begin with the merely sad,” Miles replied after a long pause.

“The debtor business has filed for bankruptcy. Taxman and banks will take all.”

Miles was devoid of expression. “I almost look forward to the tragic bit.”

“I have successfully collected from this man on multiple occasions over the duration of  your court battles. Without a judgment, that is, including similar instances of shipping and demurrage fee collections. I do believe I might have spared much of what you’ve endured, particularly during those early days when the money was available and you simply needed leverage. Men such as he thrive on a legal challenge but treasure their credit rating. Truly sorry, sir.”

It was upon hearing these words that Miles chokingly released his final breath. 

The Moral: Don’t be quick to take a debtor to court. Most often, a debt can be collected without a court judgment, through the power of professional third-party negotiation combined with the leverage of credit bureau reporting. (Only MetCredit reports to both national and specialized regional credit bureaus, giving clients maximum incentive to remit payment.)


Story 2: The Cursed Promise

Jacob and Sally Brightly had long dreamed of starting their own business. When Sally received an unexpected inheritance, it was enough to start a small pastry shop. Having met as students in a trade school for culinary arts, both were excellent pastry chefs, and they quickly became known for the quality and creativity of their work.

When a wealthy hotelier came inquiring, it seemed like a dream come true. Jacob and Sally were asked to become the sole provider of desserts to all of the tycoon’s local restaurants and hotels. Their little company grew quickly, and soon baked almost exclusively for the tycoon’s businesses. Payment came regularly, ninety days after delivery as set forth in the tycoon’s terms.

Sadly, although Jacob and Sally’s community remained fairly prosperous, most neighbouring regions were stricken by a long and deep recession. Fewer and fewer people could afford to stay in the tycoon’s fine hotels or dine in his expensive restaurants. His payments to Jacob and Sally came later and slower, and eventually halted altogether. 

The tycoon paid a personal visit, and pleaded with Jacob and Sally not to freeze deliveries, as their pastries were a bright spot in every guests’ stay and the crowning glory of his restaurants. New financing was hung up, but probably mere days from approval. The recession would not last forever, and the tycoon pledged his loyalty and great things upon the turnaround. Sally had a terrible feeling, but Jacob insisted they trust the tycoon. He had weathered many storms in amassing his fortunes, and it was not a good time start their own business over.

The promises continued for many months, over the course of which the tycoon amassed a very sizable debt to the young couple’s business. They borrowed from everyone they knew in order to continue supplying their pastries. As the orders declined, Jacob and Sally were forced to lay off most of their workers. The tycoon visited Jacob and Sally in person from time to time, often bearing gifts as tokens of his appreciation.

Then something unknown happened, and the tycoon visited no more.

One exceptionally gloomy day, Jacob and Sally awoke to a mass of returned orders at the back door of their shop, with a note informing them the businesses they supplied had closed. The tycoon, although rumoured to still be very wealthy, had stealthily relocated to a faraway land to escape his many debtors. Jacob and Sally would never receive any of the money owed them. Their little pastry business foundered in debt.

The Moral: Never become beholden to a single customer or industry. Insist that customers respect your agreed-upon payment terms regardless of promises or pleas, and do not continue to supply goods of services if your terms are breached. If you sense there is trouble, trust your instincts and submit the account promptly to your collection agency.


Story 3: The Hollow Contract

Irving Wicket ran a tiny construction business, and although nothing was ever perfect, he carved out a modest living for his little family. One foggy spring day, a well-dressed gentleman appeared at Irving’s door. The man told Irving of an amazing project, one which would pay handsomely to the selected contractor and become known far and wide for its grandeur.

Irving took up his quill and wrote a most excellent bid, with a profit margin that would enable him to retire years ahead of schedule. To Irving’s surprise, he was awarded the contract without a single query, and set out to begin work that very day.

Things quickly went awry. Irving found the job site not to be the clear, smooth land described by the man but a rocky muskeg covered in trees. Irving uttered not a word of complaint, because his margin was still very good.

He worked tirelessly to ready the ground, a labour which took a team of men many months. He began construction immediately thereafter, but struggled to hire quality builders because during the time that had elapsed, an enormous shipbuilding project had begun nearby, absorbing most of the land’s skilled tradesmen. Irving was forced to recruit carpenters and tradespeople from afar, which cost him many times more than anticipated.

The construction was dogged by disastrous weather, with driving wind and monsoon-like rains followed by an hard and bone-chilling winter. Many labourers quit, were injured or fell ill, further delaying construction. The Owner visited from time to time, and complained ever more bitterly about the delays. He requested change after change, dissatisfied with virtually every detail, and poor Irving begrudgingly complied, eventually hoping only to salvage the project and his own reputation.

And late one day, with the project near completion, the man appeared unannounced and called out to Irving. He told Irving he was terminating the assignment due to breach of contract, citing the endless delays and unacceptable quality of work. Irving protested with vigour, but his words fell on deaf ears. The man offered to pay a paltry settlement, one that would leave Irving in a dire financial situation.

Irving sued, and when his trial was heard only after years of delays and extensive legal fees, the elderly judge (a man with shockingly little understanding of the construction business for his years of service) granted Irving the most meager of judgments.

Even so, this turned out to be of no use to Irving, as the Owner continued to delay payment until his death, at which point his will was contested and ultimately split among creditors with far more energy and resources than what poor Irving could spare. The building, never completed, crumbled into a haunting and dilapidated eyesore. Irving, aged and hobbled from his labours and years of sleepless nights, was left to work many years past his planned retirement date, and to eventually die a pauper.

The Moral: if you are involved  in construction contracts, be very careful. Never proceed without a detailed scope of work, and beware the legion of factors that may lead to disputes. Exercise diligence with Change Requests and always keep the Owner up to date. Opt for alternative dispute resolution over going to court. For some (not so scary) info on avoiding construction disputes, download my free tipsheet using the link below.

UPDATED: New Story Added Oct 2021
First published Oct 2016

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Brian Summerflet Author: Brian Summerfelt

President and CEO of MetCredit, Canada's top-performing consumer and commercial collection agency

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