Collections Insider

You ask “why would I choose to settle for less money than is due to me?” This article is focused on why settling your debt may be an extremely wise choice.

When approaching debtors we are given many reasons as to why they have not paid their debt. Some report that there was a problem with the quality of the merchandise or that they were not happy with the services they received. In these cases we can easily come to an impasse. Our client feels they did provide quality products and/or services and the debtor refuses to pay. Choosing to file a law suit is normally the next step at such an impasse however settling should be discussed first if the settlement offer makes you close to whole and happy.

A settlement offer can come in a few different ways. The debtor may offer to pay less and regardless of the offer we will contact you to discuss the figure. At that time we would discuss a reasonable counter offer and present it to the debtor. Another way a settlement can be presented is by the collector saying to the debtor “How much do you feel you should pay?” This gets the debtor to think and eventually respond with a figure. So, they have gone from saying they are not going to pay to offering a settlement and getting some dialogue going.

Recently a client placed a claim with our office that had been outstanding for a year. Our office contacted the debtor and they immediately brought up a dispute that had never been brought to our client’s attention. The debtor requested that the amount of the bill be reduced from $4,100.00 to $3,100.00. The client gave this considerable thought after we explained that filing a suit would cost approximately $150.00 plus testimony would be needed, which meant time away from their office. The client decided that $3,100.00 brought them close to being whole and put the money in their hands now as opposed to six months from now after a long dragged out law suit.

Settling is also an option when the debtor claims to only be able to come up with a portion of the money due to you or that they can only afford small monthly payments. You may feel it more beneficial to have a chunk of what is due to you now versus allowing the debtor to make small monthly payments each month, which could drag on for years.

Settling is not always advisable especially if it is clear the debtor has the means to pay the debt or there are assets and wages that can be executed on. However, settling should always be considered as an option. Be sure to advise your collection agency or account representative when you place your accounts if you are willing to consider settling. This will allow the collector some leverage when dealing with the debtor.

When folks owe us money we can become very emotional about the fact we have been “wronged” however don’t allow your emotions to cloud your judgment. Get your debt resolved quickly and move on to your good paying customers. Don’t worry about teaching your client a lesson, life will do that for you. Settling is just another way to move on faster.

About the author: Jan Conte is the President of Your Collection Solution, LLC, a debt collection agency out of Newtown, Pennsylvania. She has over twenty years experience in the debt collection industry. You can find more of her articles at www.yourcollectionsolution.com/blog/.