Past-due accounts are a significant drag for towing operators. This hurts their cash flow and profitability. This situation arises because of dishonored checks, payment disputes, damages, or just because a car owner did not fulfill their obligation to pay as promised.
Is Your Impound Lot Becoming a Free Parking Garage?
If you run a towing or vehicle storage business, you know the reality: The lien sale is a broken system.
You tow a vehicle, store it for 30, 60, or 90 days, sending out certified letters that get ignored. By the time you finally get the legal right to auction it, the car is often a non-runner or a total loss. You sell it for scrap value—maybe $300—but the outstanding bill for towing, storage, and admin fees is $2,500.
Most towing companies write off that $2,200 difference as a loss. This is a massive mistake.
In 2024, with the FTC targeting “junk fees” and insurance companies fighting every storage invoice, relying on auctions to pay your bills is a strategy for bankruptcy. You need a recovery partner that understands Deficiency Balances and how to collect them without triggering a “predatory towing” lawsuit
The “Auction Trap”: Why Selling the Car Doesn’t Pay the Bills
The mathematics of a lien sale rarely work in your favor.
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The Valuation Gap: You are legally required to auction the vehicle, often to the highest bidder. If that bidder is a scrap dealer, you get pennies on the dollar.
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The “Abandonment” Mindset: Many vehicle owners want you to keep the car. They are using you as a free disposal service for their totaled or broken-down vehicle.
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The Operational Cost: Between certified mailings, newspaper ads, and auctioneer fees, many tows result in a net negative cash flow.
Why switch to Nexa?
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Recover the “Deficiency Balance”: State laws generally allow you to pursue the remaining balance after the auction proceeds are applied. We specialize in collecting this specific debt.
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Stop the “Insurance Runaround”: We know how to handle insurance adjusters who delay payment hoping you’ll give up.
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Protect Your License: With the FTC cracking down on towing practices, our strict adherence to Regulation F ensures you recover funds ethically, protecting your state operating license.
A Recovery Strategy Built for Towing & Recovery
We don’t use a generic retail collection model. We use a system designed for the unique lifecycle of an impound.
Phase 1: The “Pre-Lien” Pressure (Days 10-45)
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The Goal: Get paid before you are stuck with a worthless car.
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The Tool: Step 1 & 2 Flat-Fee ($15/account).
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The Action: We send official, third-party demands to the registered owner (and insurance carrier, if applicable). This signals that you are not just a storage lot; you are a creditor who will impact their credit score.
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The Result: Owners often pay to avoid collections, or insurance companies finally cut the check. You keep 100% of the money.
Phase 2: The “Deficiency” Pursuit (Post-Auction)
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The Goal: Recover the $2,000+ balance left after the car is sold for scrap.
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The Tool: Step 3 Contingency (40% fee).
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The Action: The car is gone. The owner thinks they are free. We use skip-tracing to locate them and enforce the debt. We report the unpaid balance to credit bureaus, preventing them from financing their next car until they pay you.
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The Result: You recover “lost” revenue that goes straight to your bottom line.
Recent Results: Real Recovery Scenarios
The “Total Loss” Abandonment (Florida)
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The Problem: A towing firm recovered a sedan from an accident scene. The owner had no collision coverage, and the car was totaled. He abandoned it at the lot. Total bill: $3,200. Auction proceeds: $450.
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The Fix: We pursued the $2,750 deficiency balance. Using skip-tracing, we found the owner at a new job.
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The Outcome: Facing a credit hit that would ruin his chances of financing a replacement vehicle, the owner agreed to a monthly payment plan. The towing company recovered $2,100 of the deficiency.
The Commercial Trucking “Ghost” (Texas)
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The Problem: A heavy-duty tower hauled a breakdown semi-truck. The trucking company (debtor) ignored the $5,800 invoice, betting the tower wouldn’t sue.
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The Fix: We ran a Litigious Defaulter Check and confirmed the trucking company was still active and solvent. We sent Step 2 demands to their Accounts Payable department.
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The Outcome: The trucking company paid in full immediately to avoid a “collection” flag on their Dun & Bradstreet business credit profile. Cost to client: $15.
FAQ: Navigating Towing Collections
Q: Can I really collect money after I’ve sold their car?
A: Yes. In most jurisdictions, the proceeds from the lien sale are applied to the debt. If the debt was $2,000 and the car sold for $200, the owner still legally owes you $1,800. This is the “Deficiency Balance,” and it is a valid, collectible debt.
Q: What if the debtor blocks your calls?
A: They can block calls, but they cannot block the US Postal Service. Our demand letters are delivered directly to their mailbox (or their new address via NCOA scrubbing). This creates the “paper trail” required for legal enforcement, which cannot be blocked or ignored like a voicemail.
Q: Do you handle insurance claims that are “pending”?
A: We handle the debt. If an insurance company is dragging its feet, assigning the account to us often motivates the policyholder (your customer) to pressure their insurer to pay up.
Q: Is there a risk of being sued for “Predatory Towing”?
A: Not if you follow the law. We are experts in the FDCPA and FCRA. We do not harass; we validate and enforce. By using a licensed third-party agency, you actually reduce your liability compared to having your own staff make angry demands.
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Turn Your “Scrap” Into Cash
Stop accepting scrap value for your hard work. Enforce your invoices and get paid for the service you provided.