Our Debt Collection System

What’s the best way to collect a past due debt? With a plan – a system. An approach that relentlessly pursues the debtor.

We have a debt collection system to collect your past due debt. It is based on the simple principle that a squeaky wheel gets the grease and thereby produce a result. We are the squeaky wheel. We are experts at getting attention. And we just keep squeaking until some resolution of the matter is obtained.

Before we begin the process of collecting money owed to someone, we usually discuss with the client the circumstances surrounding the debt. Sometimes the circumstances are unusual, or the client can anticipate some “defenses” that will be employed by the debtor/defendant. These factors may affect how we approach a collection matter and should be fully disclosed by a client before we begin collecting the money owed them.

We follow a very simple approach to this process.  It involves getting the debtor’s attention early and often. We have found this approach to be the most cost-effective method in collecting money owed and have had good success. After each step we discuss with the client whether we should proceed. The client must weigh the cost of proceeding with the benefits to be obtained. The process is generally outlined below:

  • Demand Letter.  Typically, we begin the process with a demand letter to the person that owes you the money. We know you have already written the deadbeat demanding payment, but a letter from us is usually necessary for three reasons: (a) because it is important that you give the debtor one final chance to resolve the matter (our experience is that about 15% to 20% of the debtors will attempt to resolve the problem once they see an attorney has been retained); (b) there are rules under the Texas Civil Practice and Remedies Code that govern the award of attorney’s fees that this letter satisfies; and (c) this initiates pain. Threatening a debtor with pain and inflicting pain are not the same thing. Threatening to send the file to an attorney and actually sending an attorney out to collect the file are also two different things. Receiving a letter from an attorney is generally painful for the average debtor.

  • Plaintiff’s Original Petition.  We usually file the petition within 30 days of the date of the Demand Letter. This is painful for the debtor. In many cases, the Petition is filed within 10 days of the Demand Letter. For invoices and promissory notes we always file a special type of Petition known as a “Suit on Sworn Account.” This type of Petition requires the plaintiff to swear that the account is, among other things, true, correct, due and unpaid, and requires the defendant to answer the Petition by swearing that the account is not due. If the defendant does not file a proper answer, then the plaintiff can be deemed by the court to have made out a prima fascia case and the court is likely to enter a judgment in the matter. We always include the first round of discovery with the Petition.

  • Motion For Default Judgment.  Once he/she has been served the Petition, the defendant (the debtor) has until 10:00 a.m. of  the next Monday after the expiration of twenty days to answer the Petition in writing. If they fail to file such an answer, then the case is ripe for “default.” In this case, we prepare a motion for default judgment and forward it to the court. The court reviews the motion, usually grants the motion without change and enters judgment in the plaintiff’s favor. Note that the defendant is unaware you have asked the court for judgment in this case.

  • Motion for Summary Judgment.  If the defendant files an answer, we usually respond with a motion for summary judgment. This motion will usually rely on an affidavit from our client that the account is due and shifts the burden to the defendant to explain to the judge the areas of the invoice(s) that are not due. In most cases, the defendant cannot defend themselves and the court awards our client a judgment. Note: if the defendant can defend themselves at this point by showing the judge that there are genuine issues of material fact, then this is not a routine collection case and we need to carefully examine the circumstances surrounding the invoices to be certain everything is “in order.”

  • Prejudgment Writs of Garnishment. This is an order of the court to a third party (like a bank) that is in possession of assets owned by the judgment-debtor to surrender those assets to the court. Extreme caution is advised in this matter because the traps are many. When you obtain a Writ of Garnishment before you have a judgment you must post a bond as protection for the debtor. We use this device quite frequently, but only after careful examination of the facts. That said, this device is very effective in collecting the debt. This is a good reason to always keep a copy of every check written to you. If you have copies of the checks, then you will have useful information when the debtor eventually fails to pay you.

  • I Have a Judgment, Now What? After obtaining a judgment, we will begin attempting to collect the judgment. For a discussion of those procedures, and the pain they cause, click here.

  • What if the Defendant has Filed a Written Answer to the Lawsuit and our Motion for Summary Judgment is Denied?  If this happens, then the defendant has presented a defense to your claim. It is likely very flimsy, but yet enough to overcome a motion for summary judgment. In that case we need to discuss the approach that gives the greatest benefit for the most reasonable price. It makes no sense to treat a case collecting $3,000.00 like a case that is collecting $300,000.00. No two cases are the same and should be treated differently. We usually force these cases to trial, usually before a judge, as soon as possible.

    If you would like to begin collecting your delinquent accounts or bad debts, please click here.

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