Instead of Suing

How to Collect Debt Without Suing for a Court Order

Business Debt  |  4 min read

“Sue me!” 

If a debtor tells you these words, I have one piece of advice:

Don’t you dare.

There are four reasons anyone would throw out such an ultimatum, and none of them is in your favour.

First, it’s a bluff. Even the craziest debtor doesn’t welcome the costs and stress of going to court. The phony ultimatum is an ego-driven display of strength, in the hope you will lose confidence in your position and squirm away with your tail between your legs. It’s a form of bullying, and you’re not going to fall for it.

Second, they are buying time. If you live in a place with a busy court docket (as in all Canadian cities), expect to wait several months for a hearing. You will most likely end up in a pre-trial hearing, where the debtor may attempt to whittle down the amount owing – and request even more time to pay anything that’s left!

If the debtor is hurting for cash right now, in a few months he or she might be insolvent or bankrupt. Statistically, with every month that goes by, your chance of ever collecting a debt diminishes by a sizable percentage. That time works entirely for the debtor, and against you.

Third, suing costs heaps of money. Even if you choose to represent yourself in court (there is an old saying about people who do that…) there will be filing fees, possibly witness fees, and you will not be reimbursed for wages lost to preparing for or attending the hearing. You will need to spend time learning the complicated process, picking up forms and filing your claim – and many hours ruminating and fretting about the whole thing. All of these add up, and are non-refundable if the court’s judgment is not in your favour. Which brings us to my next point.

Fourth and finally, you may not win. In the end, it will all be up to the judge, and the defendant may exploit your nervousness and frustration to appear more credible, or simply do a fantastic job disputing the debt. Some debtors are expert con artists and manipulators, which may be what got you into this predicament. If you lose in court, you can be out everything, including the moral ground.

Ready for the good news? 
You do NOT need to go to court to collect that debt.

A good collection agency can collect the debt for you, almost always without the anguish, wasted time, or cost of going to court. In fact, at my company we often get referrals from lawyers who wish to spare their clients the cost and pitfalls of the legal route, and opt to recommend our services.

Is a Collection Agency an Ethical Option?
A lot of people, even some savvy business owners, underestimate the value of a good collection agency. Using a collection agency is absolutely an ethical and responsible way to collect outstanding debt. Our clients are banks, telecom companies, landlords, trucking companies, and organizations of every size. We pride ourselves on being the most ethical, respect-driven agency in the business. That’s been our key differentiator for more than four decades.

Do I Need a Court Order to Collect Debt? 
In the vast majority of cases, a legal judgment in your favour is not necessary in order to collect. All we need is good documentation of the kind you would take to court: contracts, invoices, communications, waybills and other proof of the debt. If you have already sued and obtained a civil court judgment, a collection agency can help you collect on it. We do that all the time, although the enforcement was usually unnecessary.

A little-known fact is that my company collects debt on behalf of many law firms that don’t have their own collections department. That’s right: we collect for lawyers, and even their clients when getting a judgment resulted in no immediate payment.

We also have an in-house legal department with deep expertise in legal debt collection, which we reserve as an absolute last recourse. 

What Does a Collection Agency Charge?
The fees charged by a collection vary by the age of debt, type of debt, amount and risk. It is normally from 25 to 35 percent, with discounts on large portfolios. This is easily less than you would pay a law firm, and an excellent value if your own time is worth anything. One of the greatest benefits of using a collection agency is that the best ones (mine included) do not charge any fees unless the collection effort is successful. For you, that minimizes the risk, because the agency takes on all those costs. Just be sure to partner with a top-performing collection agency, and you’re golden. 

Perhaps the most under-rated advantage of using a debt collection agency is that once you do, you can forget about your past-due accounts and get on with doing what makes you money. The collection agency will report back to you on its progress, and your job is to let go. No more contemplating your entitlement to the debt or excruciating follow-ups with the debtor.

You can be free. 

If you have any questions or want to see some action right away, please reach out to me directly, or talk to a helpful debt collection specialist at 1-888-797-7727. If you’re not quite ready yet, use link below to download my 10 free pro tips!

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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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