FAQ

When should an account be placed for collection?

What is the usual approach that other collection agencies use?

How can I determine how my current collection agency is performing?

What information is required to place an account?

Once a collection agency goes to work, what are the chances of success?

What are the procedures when a debtor has moved or disappeared?

What is "skip tracing"?

How do I place an account for collection?

If a debtor goes out of business owing money and subsequently opens a new business, can a claim be filed against the new (successor) company?

What should the creditor expect when he authorizes a law suit?

When should an account be placed for collection?
In a word, the sooner the better. The Commercial Collection Agency Association has done studies among its members that prove conclusively the earlier an account is placed, the better the chance for recovery. Our own records conclude that our Free Final Demands are far more effective when the account has aged 60-120 days. According to the CCAA, you have an 85% chance of recovery if an account is placed for collection when it has aged 2 months versus a 56% chance of recovery if it has aged 6 months. What good is a sale if you do not collect the money? Newman & Kane is prepared to build a partnership with your firm by developing a plan to collect your receivables from the day they become delinquent to the day they are paid in full.

What is the usual approach that other collection agencies use?
With many collection agencies, you simply get a "one-size-fits-all" collection approach to your debtor that most often yields very poor results. Typically, collection agencies will simply mail a series of generic "fill-in-the-blank" collection letters to your debtor's last known address. A staff of low-paid and inexperienced "telemarketers" are used to contact your debtors through a computerized auto-dialer. These agencies will NOT customize their letters to your debtor, will NOT spend any time or money on skip tracing (unless the account balance is very high), will NOT go so far as to locate family members, assets, business affiliations, etc., will NOT invest in informational sources or databases, and will NOT give all your accounts the time and effort deserved. Use Newman & Kane and see the difference.

How can I determine how my current collection agency is performing?
We ask that if you are currently using the services of a collection agency, compile a list of the accounts they have not recovered in the past 6 months and let Newman & Kane work on those "uncollectible" accounts. Let us show you just how "collectible" they really are! If we recover from those debtors, than you should seriously consider assigning all your accounts to Newman & Kane.

What information is required to place an account?
At the very least we need contact information for the client and the debtor and the amount to be collected. Specifically, we need the name of the person to contact at your firm, your firm's name, address, phone and fax numbers, and email address. We need the same information for the debtor and the amount due. It is helpful but not necessary to have a statement of account. If we need copies of invoices, proofs of delivery, credit applications, etc. we will ask for them later. If you know the account is disputed, please tell us the nature of the dispute and provide us with as much documentation to support your position as possible.

Once a collection agency goes to work, what are the chances of success?
The odds of collection are pretty good at an early stage but drop dramatically with the age of the account. The longer a delinquent account is held by the creditor, the lower its chances of being collected at all.

When you turn over an account for collection, especially if it's of an advanced age, be realistic; don't expect miracles. If you are dealing with a solid business that hasn't paid, you have a fair chance of collecting once the agency sets to work. But, if the debtor-business is financially shaky or irresponsible, recognize that the agency will have tough going. However, using collection professionals like Newman & Kane can increase the odds of collecting, but there are no guarantees.

What are the procedures when a debtor has moved or disappeared?
A debtor who has moved without notifying the creditor is called a "skip". Tracing the whereabouts of a "skipped" debtor is usually performed by an agency which specializes in this process called "skip tracing" at a separate cost, payable in advance. At Newman & Kane, this service is included as part of our collections process.

What is "skip tracing"?
Skip tracing is the process of locating contact information on your debtor, such as a current or alternate address and telephone number, and can include obtaining a person's place of employment, names and addresses of family members, friends, or ex-spouses, locating assets such as property, bank accounts, or automobiles, finding relatives' telephone numbers, and much more.

How do I place an account for collection?
Simply click here to complete our quick and easy online form.

If a debtor goes out of business owing money and subsequently opens a new business, can a claim be filed against the new (successor) company?
When we receive inquiries as to whether a successor company may be liable for a prior company's debt, we first need to know: What exactly was the prior entity? If it was a corporation and the new company is a separate corporation, the creditor cannot directly proceed against the new entity, which is never liable.

However, there are some possible avenues which can be followed:

It might be possible to sue the prior corporation for the purpose of obtaining the right to subpoena the principal of both to determine whether inventory was wrongfully transferred to the new corporation without sufficient consideration.

If enough evidence can be developed to prove the successor corporation is simply a continuation of the original company, it may be possible to convince the principal to "pay up" on the old debt. However, it is necessary to have clear and convincing proof as well as extensive documentation and evidence which is generally very difficult to obtain.

In these situations, the collection agency can have the case investigated by its correspondent attorney in the debtor's area to determine the feasibility of commencing a lawsuit.

What should the creditor expect when he authorizes a law suit?
Litigation is a slow process. While in some instances filing a suit may prompt the debtor to allow a default judgment in the creditor's favor or to settle the case, crowded court dockets and delaying tactics of the debtor may delay a judgment for many months or even years.

It is necessary for the creditor to determine whether the likelihood and amount of recovery justify the time and expense of litigation.

If you authorize a suit, a professional collection agency will inform you of the court costs and suit fee requested by the receiving attorney. These are in addition to the contingent collection fees.

Court costs required to institute an action (which cover filing fees, service of process, etc.) vary widely from court to court and state to state and must be paid by the creditor.

Suit fees (which cover the work of the attorney in preparing and filing the necessary papers and in making appearances in court) may be contingent (retained only out of recoveries), non-contingent (payable in advance regardless of any collection), or a combination of both.