Debtor excuses are the biggest problem in debt collection. The most common reasons why debtors are unable to pay their debt are mentioned in this article. Sometimes they are actually truthful, but many of them simply use these as a delay tactic to defer paying on time or even avoid paying altogether.
A debt collector should insist on proof or an explanation about what the debtor is saying. The debt collector may even give an option to the debtor to pay the outstanding amount in installments or renegotiate to settle the debt for a slightly lower amount ( provided you have authorization from your client to settle debts for a slightly lower amount). Taking an aggressive approach will force the debtor to hide things from you, lowering your chances of getting paid.
|Financial Problems||How to negotiate|
|• Job Loss. |
• I am waiting for my customers to pay me first.
• Cash flow problem.
• Spent money on a medical emergency.
• Lost money in gambling.
• No money to pay, no special reason.
• Medical emergency expenses.
|When does he/she expect to be employed again? Is the debtor receiving unemployment benefits? How are their other expenses being met? Understand the debtor’s situation and ask when he expects the situation to improve, contact the debtor at a later date again. Maybe the debtor is more comfortable paying in installments or settle for a slightly less amount.|
|Delay Tactic||How to negotiate|
|• Need a copy of the invoice or statement. |
• Prove me that I actually owe this amount.
• Never received an invoice, asking me to pay.
• Check is in the mail, you should get it soon.
• No time for this right now, I have other priorities.
• Our accounting department works only 1 hour a day or once a month, please call during that time. Our accounting department sits elsewhere.
• No time to go to the bank due to my work schedule.- Changing banks or checkbooks not received yet.
• Signatory is not available.
• Lost the bill, can you sent it again.
• Really, I haven’t paid it yet? Give me time to check my bank statement.
• I know nothing about this.
• Debtor returns the bill to the sender, tries to become untraceable.
• I did not expect my bill to be that high.• Someone else handles my billing
( ok .. try to take that person on a conference line)
|Provide information/ documentation if the debtor had requested for the verification of debt. This could be resending the invoice or documentation to prove that the debt is actually owed. Even better – fax or email it to them immediately while you have them on the phone. |
Most of the time the collectors have to actually call the debtor on a later date/time that is convenient for the debtor, and then communicate that he has already been given enough time. An experienced debt collector knows how to work around these delay tactics. Ex: He may ask the debtor to give the check number and date when the check was written, the debtor will fumble badly if they are lying.
|Dispute or Denial to pay||How to negotiate|
|• I do not owe anything |
• I will send you legal notice for harassing me.
• Let’s go to the court.
• Invoice is disputed.
• Never received the goods or service.
• Goods were defected or service provided was bad.
• I am being overcharged or I did not expect my bill to be that high
• My insurance company did not cover my entire bill as I thought.
• Over my dead body.
• Threats: Dude, I have connections; will have someone visit you !!
| If the debtor continues to resist and there is adequate proof that debtor owes the debt, it may be time to check with the attorneys if a legal suit is advisable. |
Or may be the debtor really own nothing, data in your systems could be incorrect or outdated.
|Other Reasons||How to negotiate|
| • Statute of limitations |
• Person you need to talk to is not here right now.
• Debtor has expired
• I have already paid.
• Wrong number.
|A debt collector needs to get the facts straight and get further information on the case. Take a call if further collection activity is even possible or not.|
|Possible Genuine Reasons||What to do?|
|• I am disabled and have no money. |
|Check with your supervisor if an asset check/search is advisable or not. Most companies will not do this unless the balance is very high. |
Service Members Civil Relief Act and Fair Debt Collection Practices for Servicemembers Act (HR 5003), give some extra rights to military personnel deployed overseas, make sure their rights are not violated.
A Debt Collector should deal with great patience, yet sound confident and assertive. Using abusive or unprofessional language is not only illegal; it can also take the debtor to a point where he becomes completely non-cooperative.
It is very important to hire a good Collection Agency which employs top-of-the-line debt collectors, even if they charge slightly more than other agencies. Not every debt collector can make a perfect collections call, they get better and groomed over time.