What to Do to Get the Most Out of Your Commercial Collections in Delray Beach?

Businesses face the challenges of collecting from vendors that owe them money or products and services. The challenge is that most collection attorneys are focusing only on the consumer side of things. 

According to the Collection Bureau of America, commercial collections are an $18 billion industry and growing by 4.4% annually. 

Getting the most out of your debt collection requires working with a professional that produces results. Here are some things to consider so you get the most out of your commercial debt collections in Delray Beach.  

Specialization

Specialization is one of the areas you want to focus on to get the best results. Not all collectors are the same and you want to choose an attorney that specializes in commercial collections in Delray Beach. 

The best approach is to ask about the experience, knowledge, and qualifications in this area. You want to see if they were successful in contacting mid and high-level executives and what approaches work well. 

A good way to determine this is to look at the testimonials and ask for a list of referrals. This will help you to find an excellent firm for commercial collections. 

The Law Offices of Thomas Maccari P.A. is the best in commercial collections. We have five-star reviews from our clients and know how to get you the money you are owed. No one is better at commercial collections than our trained and experienced team of professionals. 

The Approach

You must follow certain procedures under the law to be the most effective at commercial collections. 

The first step is a letter is sent out that is followed by attempts to directly contact the organization. 

You want to work with a collector that does their homework and has a strategy for approaching the debtor. The best approaches are to use honesty, build trust, and show professionalism. Once the debtor realizes this is when you will see them become more willing to work with you. They know that you are following the law and acting responsibly. 

A great collector listens carefully, empathizes, and understands their situation. They are not trying to threaten or berate the debtor. There are certain practices you follow that will get you the best results in collecting the money you are owed. 

The Law Offices of Thomas J Maccari P.A. is the best commercial collections attorney in Delray Beach. They are members of the Commercial Law League of America and have favorable reviews in American Lawyers Quarterly. 

Calls Us Today!

These are some things to consider when collecting commercial debt. Call the Law Offices of Thomas Maccari today at 561-892-9772 and see why we are the best. Our office is located on Congress Avenue, near the Delray Oaks Natural Area. 

5 Things That Debt Collectors Aren’t Allowed To Do

Debt collectors work for creditors to collect debts owed by consumers. They often contact people who owe money via phone calls, letters, and even text messages. If you owe money, you may receive a collection notice from a creditor.

Additionally, debt collectors should communicate to you using specific language while informing you of your rights. In the following blog, we discuss five things that debt collectors cannot do.

1. Publicly Shame You

Typically, debt collectors are not allowed to shame you in any way publicly. This includes calling your friends and coworkers. It also means they can’t use derogatory terms such as “deadbeat” or “thief” when contacting you, as this could lead to civil litigation.

So, it should be if you get a letter from a collector and it sounds insulting or threatening. Instead, it should stick to facts about what you owe and offer ways to pay back what you owe. Also, be sure to consult your construction attorney in FL about the same.

2. Threaten Violence or Arrest

Another thing is that debt collectors are not permitted to make threats of violence or arrest of yourself or others, including family members. Debt collectors can say something like, “You will be in trouble if you don’t repay this right away.” But they cannot arrest anyone (or their family) over this debt.

And they definitely cannot tell someone else to commit physical harm against themselves or another person. For example: “If you don’t pay us now, I will have some thugs come after you!” However, if you happen to receive a threat from a debt collector, be sure to contact a reputable debt collection attorney right away.

3. Use Deceptive Tactics

It’s common for debt collectors to trick consumers into paying up. One of the most prevalent lies is claiming that an employer or court ordered the consumer to pay off the debt. This isn’t true. The IRS does require people who fail to file tax returns to pay up, but it says nothing about making an ex-employee or student liable for a debt.

Debt collectors love using these types of lies to justify harassing people — especially when they know they’re wrong. Be wary.

One way to protect yourself is never to sign anything if you haven’t read it first. You can also consider signing it up with the help of a reputable construction attorney. If a caller tells you that you signed a contract or “agreed” to pay back a loan, you can ask them to prove that you did. This will help you avoid unnecessary Civil Litigation.

4. Harass Your Children

It’s illegal for debt collectors to communicate directly with children or pressure them to pay a parent’s debt. Creditors must talk to adults in the household first before contacting a child under 18 years old. They can’t threaten a child or demand payment because they carry an open account. The same goes for college students.

5. Call at Unusual Hours

Calls made outside business hours generally apply to businesses only. When a caller says they’re calling about a credit card debt, it’s usually best to hang up the phone.

There is no reason to be rude. It may seem harsh, but you probably want to spend your evening doing more important things than dealing with a collector if you work full time. Additionally, you can consider contacting your debt collection attorney as they can advise on how to handle those annoying calls.

Conclusion

If a collector calls too often or makes unreasonable demands, politely inform them that you prefer to speak with a supervisor. Remember that many legitimate companies will send out a collection manager instead. for more detail about debt collection, be sure to contact us today.

What Are Construction Liens and How to Prevent It?

Construction is a difficult industry. Surviving includes a significant work ethic, excellent problem-solving abilities, and a commitment to client service. Most contractors would tell you that it’s all worth it to make their customers’ dreams a reality. It’s even wonderful when the cheque arrives in the mail. When a contractor works on a property, they have the right to be compensated for their efforts. That is the fundamental basis for the existence of construction liens.

What happens if contractors are not paid? We know it isn’t easy to believe, but individuals in this world don’t keep their half of the bargain. The contractor might have completed the work following the contract, only to be left empty-handed by the customer. This kind of messed-up situation usually ends up in contractors filing a Construction Liens to confirm they get all the money your business owes to them.

In this article, we will explain to you what is Construction liens and how to prevent construction liens so that your business is safe and you can maintain healthy business relations with the contractors and other workers for a longer time.

What Is a Construction Liens?

A construction lien, also known as a mechanics lien, is a sort of protection resource in the property granted to suppliers, contractors, and others to collect payments on construction projects if they have not been paid completely or at all.

Construction Liens is a powerful and advantageous tool for the suppliers and contractors since it gives a strong surety for their payments fulfillment. 

Every company should abide by Boca Raton Construction liens laws which regulate the payment deadlines, notices, and the entire procedure of filing construction liens claim by the construction professionals.

 

How to Prevent Construction Liens?

  • Try to Clear All Your Payments On Time

The most efficient and easiest way to protect yourself against any Construction Liens claims would be to pay up your suppliers, constructors, and workers completely and on time. If there are any payments due, then try to send them out as soon as possible. 

Meanwhile, keep ensuring your suppliers, contractors, and workers that you will be paying them soon with any strong source they can depend on. This will help you get some more time to clear all the payments and save your business from lien claims. 

However, we realize that you would not be reading this article if you could resolve the issue so simply. For that, read on to the other solutions.

  • Keep a Backup Financial Setup In Case You Run Out of Money

Suppose you have been unable to pay your suppliers and constructors that do not state you as a fraud in Boca Raton. Construction Liens claim that the contractor has not been paid within the set deadline. Several honest people genuinely run out of money and time, hence, miss the deadline of payment. 

You can still turn this around by having a financial resource on backup. This strategic move will save you time and prevent your business from all the lien claims. This will also portray your strong image to your contractors that you are truly committed to paying them on time and value their work, strengthening your corporate relations with them.

  • Verify Your Contractor’s Credibility

Another way to protect your business from lien claims would be to investigate and ensure the credibility of your contractor in Boca Raton. Construction Liens is a serious claim, and if you see a contractor filing multiple claims, then it’s a big red flag, and you should not hire them as they will surely create problems for your business.

You can check the credit and payment history of the contractors, subcontractors, and suppliers to get a better picture of how they deal with their clients. You may also check with their previous clients and inquire about their experience to know what you are going to get yourself into.

  • Ask For a Lien Waiver

We know this might be a bold move, but it is the strongest of all solutions that we have presented to you so far. A lien waiver is a contract between the business and the contractor in which the contractor quit all their rights to claim a construction lien on your business. 

If you are operating your business in Florida, you cannot make a lien waiver agreement with the contractor before labor. However, you can finalize it afterward before the payment finalization.

Conclusion

Boca Raton construction liens laws are strict like any other state, which is why it is better to prepare yourself beforehand. If you still have queries, you can get in touch with a law firm such as The Law Office of Thomas J. Maccari P.A. to help you out and guide you through the entire process.

We hope this guide will help you protect your business from any lien claims and enable you to maintain good corporate relationships with your suppliers and contractors.

5 Reasons To Hire A Lawyer To Draft Your Business Contracts

Businesses are not required to hire a commercial collections lawyer in Delray Beach to draft their contracts. However, it is important to note that if money is involved, you risk a substantial loss by not having a lawyer at your side. At the Law Office of Thomas J. Maccari, P.A., we not only provide quick and efficient service to help clients obtain payment from the debtor before litigation, but we can also help you draft important contracts and credit applications. So, while it is not a requirement to hire a lawyer, here are reasons we believe you should.

We Can Fix The Contract To Protect You

A contract is an important document that should never be written hastily or at the last minute. You should carefully consider your choice of words when drafting any legally binding agreement, as it can make the difference between protecting your company or becoming a liability. Our team of experienced lawyers can offer their knowledgeable opinion and legal skills to identify sections that are unclear or may cause problems down the road.

We Offer An Outside Perspective

Lawyers do not gain anything from the outcome of the agreement. This can prove invaluable when you need honest advice, an outside perspective, or a second opinion with important business dealings. Furthermore, we look at the situation from several different angles. For example, we always consider the worst-case scenarios. We then incorporate these scenarios into the contract to ensure the other party does not find a loophole if they do not meet their obligations.

We Make Sure It’s Legally Enforceable

When it comes to contracts, your wording is everything. Even if you intended to say one thing, you may have written it in a way that the other party can manipulate to suit their favor, or the court is unable to interpret. Every detail, even the placement of a comma, matters when drafting a contract. You may not know this, but a lawyer does. That is why it’s important to have a professional review the draft before it is finalized.

Although our team generally helps businesses with their debt collection, lien enforcement, and civil litigation needs, we also provide other business services such as custom contracts. We can ensure that nothing of significance is left out or misworded and that your contract is legally enforceable.

We Don’t Use Contract Templates

You have a lot on your plate, so to make things easier, you print out a contract template that you found online. You have read and reread it and you strongly believe that it sounds good and looks valid. As you may know, lawyers do not recommend that you do this. Our reasoning is simple.

  • Who drafted the template? Was it a legal professional or just someone who is good at grammar and writing? Since you don’t know, this can pose many serious problems in the future.
  • Is the template up to date and accurate? If it was written years ago, it is possible that the laws have changed since then.
  • Templates are too vague – they cannot cover the legal issues that are specific to your industry. When the wording is too vague, the courts may not enforce the contract.
  • Did you receive the owner’s permission before using the template? Plagiarism may be the last thing on your mind but using a template without the writer’s permission can make you liable for copyright infringement.

At the Law Office of Thomas J. Maccari, P.A., we do a lot more than provide services for commercial collections in Delray Beach. Our team can draft contracts that are specific to your unique situation, whether it be for goods or materials sold, services rendered, or practically any other situation that must be confirmed in writing.

We Will Include New Regulations And State Laws

As previously stated, one of the problems with templates is that they may be outdated. Additionally, you most likely will not find a template that takes state laws into account. Have you kept up with the new laws and regulations? With so many other considerations and decisions to make, it is not unusual for business owners not to know the latest legislative changes. Nevertheless, you want to draft a contract that is up to date and the best way to do this is by contacting our lawyers in South Florida.

Contact the Law Office of Thomas J. Maccari, P.A.

Do not make mistakes that other businesses have made. 

Thomas J. Maccari is a commercial collections lawyer in Delray Beach, but he also has experience helping businesses draft the best contract for their circumstance. Call (561) 982-9772 for a consultation.

Construction Liens – How They Protect the Rights of Workers

A construction lien, also known as a mechanic’s lien, is a strong and legal way for contractors to get paid for services or materials they provide on a project. It is a claim filed by workers who have completed work on a property but have not been paid. Boca Raton Construction Lien rights are generally held by direct contractors, subcontractors, material suppliers, equipment lessors, design specialists (architects and engineers), and workers. 

While lien rights for suppliers-to-suppliers are not usually common, each state’s lien law is unique. These general rules do not apply to everyone. However, there are several exceptions to the Construction Liens in Boca Raton, such as sub-subcontractors, suppliers to suppliers, and anyone who is supposed to be licensed in Florida but isn’t.

Scroll down to see how construction liens are a powerful tool and how they protect workers’ rights to a great extent.

They Get You Paid!

The most obvious benefit is that it ensures that you are paid. A mechanic’s lien ensures that you are paid for the labor or supplies you supply on a renovation, repair, or construction job by restricting the property. 

Construction Liens are public records and will show up on a property’s title search. This means that if the property owner wants to sell the property, they will have a tough time doing so if there is a lien on it.

They Put Pressure On the Debtor 

Mechanic’s liens, rather than a lawsuit, can be a significantly more effective means for you to collect your payment. It also includes a deadline for when litigation will begin if payment is not received, and the prospect of a lawsuit is typically enough to convince the homeowner to pay the debt. 

It may be tough for the homeowner to ignore your mechanic’s lien if you file it correctly.

 

Reduced Financial Risk

Filing a Construction Lien against a private or government property will help you claim your right to make a bond claim. When a state, county, or municipal project remains unpaid, the unpaid party can file a claim for payment against the payment bond.

You can utilize a lien as a type of security to force payment if you are not paid for the work or materials you provided on a building project. A lien is a legal claim against the property title that is extremely difficult to remove without paying the bill.

Contractors, subcontractors, and suppliers, all of whom are obliged to put up considerable sums of money upfront, benefit from this entitlement.

Claim to Security Interest

Unpaid parties that provided labor or materials on a private building project whether residential or commercial, might file a Construction Lien. The claimant will obtain a security interest in the improved property by filing the mechanics lien. When the employer defaults, it gives the workers the legal right to claim property financed with the loan.

Stop The Cash Flow On The Disputed Project

When you file a mechanics lien, you can often stop cash flow, which serves to your advantage. Until you are paid or the owner of the project gets assurance that you will be paid soon, the lender or the owner will stop paying its general or specific subcontractors. 

When cash flow is limited in the construction sector, it’s tough for contractors and owners to stay ahead of the competition. This pause puts pressure on them and draws everyone’s attention, which ensures that you are paid as soon as possible.

Speed Up The Payment Process 

Another significant benefit is that the lender will ask the owner to remove the lien even before the property is put on the market in order to maintain a clear security interest in the property. You might be able to get paid sooner as a result of this. 

If the homeowner fails to pay you, the lien gives you the legal authority to collect from the property. Most importantly, filing a mechanics lien informs all parties involved that you are serious about collecting payment and will take legal action to do it.

Contact Us Today

When a mechanics lien is attached to a debt, the chances of that obligation being paid improve dramatically. 

A mechanics lien on the property provides security for your obligation, involves more parties, causes contractual breaches, and is difficult to remove – for many of the reasons listed above. 

Because of these factors, it provides leverage, which means the mechanical lien might assist you in getting paid in more ways than one. Give us a call today at (561) 982-9772 to learn more.

Benefits of a Florida Commercial Debt Collection Attorney

When you need help collecting funds to recover an unpaid loan, you may benefit from hiring a debt collection attorney. They can provide legal assistance, help collect large debts from your clients, and simplify the overall process. Don’t give up attempting to collect a debt. Instead, contact a Florida commercial debt collection attorney like the Law Office of Thomas J. Maccari, P.A.

What is a debt collection attorney?

A debt collection attorney specializes in coming up with strategies for businesses and individuals to collect payment from those who refuse to pay. Their years of experience and expert legal solutions will make them an asset when your business wants to reclaim money that was loaned out. When you hire a Florida commercial debt collection attorney, this person will offer assistance in many ways. For example, lawyers will draft letters threatening legal action against the debtor, handle the necessary paperwork and represent you in court, if necessary.

In general, they do not leave harassing phone calls, as these methods are not always effective. It’s likely that your business has already utilized that strategy unsuccessfully. Additionally, attorneys collecting a debt do not report late payments or defaults to credit reporting bureaus, which can make it difficult for debtors to obtain a loan in the future. Instead, the attorney you hire will take several legal actions, such as:

  • File a lawsuit against the debtor
  • Determine what the debtor can afford to pay and request evidence of their income and spending
  • Obtain a court order that will award you the money you are owed, also known as a money judgment
  • Take steps to ensure the money judgment is honored

Why should you hire an attorney? 

You may be thinking that your business does not need an attorney to collect a debt. Perhaps you believe the Florida commercial debt collection service is an undertaking your company can handle. In some cases, this may be true. However, we recommend that you seek legal representation if your business is experiencing the following:

  • You are attempting to collect a debt from a large company. Corporate debts can be challenging to collect, as these companies tend to have lots of resources at their disposal.
  • The client has substantially high debt. If your client owes you thousands of dollars, this isn’t to be taken lightly. You don’t want to do anything to risk losing such a large amount of money. Hiring a lawyer may be an expense, but worthwhile.
  • You have attempted to collect a debt for several years, and now you’re taking the client to court. If you’re going to court, it’s highly recommended that you hire legal representation, rather than represent yourself or hire an attorney that isn’t experienced in Florida commercial debt collection.
  • You are confused about a matter and need legal advice on your best course of action. A commercial collections lawyer Delray Beach will be able to assist you.
  • You must write a legal complaint. Writing a demand letter may seem cut and dried, but there are many small, yet crucial details that go into it. For example, the letter needs to be short and to the point, so the judge or court clerk will read the entirety of it; but it must also be detailed. An attorney can write an effective letter that may even prompt your client into settling the debt to avoid going to court.

Should you hire an attorney or agency? 

At the Law Office of Thomas J. Maccari P.A., we frequently get asked the difference between a debt attorney vs debt agency. There are some responsibilities that these two occupations share. For example, a debt collecting agency can discuss strategies to help you collect a debt. However, if you need to pursue the matter legally, the agency can no longer be of assistance.

Whereas an attorney can provide legal action, draft demand letters, and even represent you in court. So, if the matter has gone on too long, or there is a large sum of money at stake, it’s recommended to hire a commercial collections lawyer in Delray Beach.

Contact Thomas J. Maccari P.A. 

We are a full-service law firm that assists Florida businesses with their debt collection, lien enforcement, and civil litigation needs. If you need assistance, contact us for a free consultation.

Promissory Note – The 4 Types And Their Uses.

A promissory note is a debt instrument that lets companies and individuals get financing without needing a bank. This would be any individual or a company willing to carry the note (and provide financing) under the agreed-upon terms. Basically, anyone can be a lender.

A promissory note typically contains the following pertinent information regarding the loan:

  • The parties involved (issuer and payee)
  • The principal amount
  • Interest rate
  • Maturity date
  • How the debt will be paid
  • Consequences for non-payment or default in payment
  • Date and place of issuance
  • Issuer’s signature.

This type of instrument adds weight to an informal handshake between friends, or your cousin’s IOU on a bar napkin. A promissory note is one of a variety of business services that Mr. Maccari offers to his business clients. There are 4 basic types of promissory notes. We will go into the details of each one here.

Due On-Demand Or Default Promissory Note.

This type of promissory note is best to be used between family and friends. It’s that step up from the IOU on a bar napkin we mentioned. This is one of the types of promissory notes best for small loans. Helping your friend buy a moped, or your sister get her cookie business started.

There is no specific date set for when it is due, this lets your sister or friend make good on the loan when they are financially able. There are usually no or low-interest rates.

The big drawback to this type of promissory note is that it may not get paid. You might feel as if your friend or family member has taken advantage of your good nature. There must be a strong foundation of trust between lender and borrower. And as the lender, you need to allow for the fact that you might not get your money back. If you feel this will negatively impact the relationship, don’t do it.

Due On A Specific Date Promissory Note.

This is one of the types of promissory notes that are to the point. It demands the repayment of a loan or debt before a specific date. Use this promissory note when loaning small amounts of money. Like when your roommate’s car breaks down and he needs a few hundred dollars to repair the transmission.

Be sure the person you are lending it to will be solvent enough to make the payment on time. That way you can avoid uncomfortable silences at the dinner table.

Installment Payment Promissory Note.

This is one of those types of promissory notes used when you need to buy something more expensive. When you need to replace your stove or living room furniture is when a promissory note like this is useful. This type of loan can have a higher interest rate attached to it, so buyers beware.

A down payment to reduce the interest amount is typically made. Payments are then divvied up into equal monthly installments including the agreed-upon interest. Once the principal is paid, the debt is discharged. This makes it easier to agree to terms of payment that you can afford.

Installment Payment With a Final Balloon Payment Promissory Note.

A mortgage is a good example of these types of promissory notes. If you are short on cash but expect to refinance or pay off the loan in the future, this note is ideal. The interest rate on this promissory note is usually lower. The principal including interest is paid in equal and consecutive installments. In the end, the loan can be reset or the balance due is paid off (the balloon payment).

We Can Help!

To learn the finer detail of how a promissory note works, call the Law Office of Thomas J. Maccari. We have a long list of satisfied clients who always call on Mr. Maccari for all their legal service needs. We are located in Boca Raton and serve the businesses and residents of Broward and Palm Beach county with pride. Click here or give us a call at (561) 982-9772.

Should a Business Owner Hire a Commercial Collections Attorney During a Pandemic?

The Coronavirus pandemic has hit many businesses hard, especially in South Florida, where its cities depend on the dining, entertainment, and hotel industries to bolster its once healthy tourism business . The harsh economic reality will undoubtedly face its citizens and businesses alike as government support becomes less available and unpaid bills start piling up. Florida commercial debt collection is on the rise during the pandemic. Many companies are now bracing themselves for the avalanche of businesses that are unable to pay their financial obligations. A recent economic report found that more than 74% of small businesses are now in debt due to the Coronavirus pandemic.

Running a business can be difficult during a pandemic, but what happens when your customers fail to pay you on time or not at all?

 If you’ve tried your best to collect a debt to no avail, it may be time to contact a commercial collections attorney for assistance. Even during a pandemic, you are within your rights to collect a debt that is owed you. The Law Offices of Thomas J. Maccari can assist you with all your commercial debt collection needs at an affordable cost. We have experience collecting debts in many areas, including banks and credit unions, medical providers, hospitals, insurance providers, retail, restaurant, construction industries, and much more.

What are some steps and strategies to collect a debt?

  1. Send a Strong Letter

Before you turn to a commercial collections attorney to help, make sure you have tried all avenues available to you. Take all reasonable steps to collect a debt from your customers by sending a strong debt collection letter. If you receive no response to the initial letter, send out a follow-up letter and then a final letter before taking your case to the next level.

  1. Hire a Collections Agency

Many people hire a collection agency when their payment requests go unanswered. During the age of Covid-19, there may be some consumer agencies in place to help your customers avoid or stop debt collection agencies from harassing you altogether. If you feel that your debt collection requests may violate another’s rights, it’s best to contact a commercial debt collection attorney to assist you with the more complex strategies available to build your case.

  1. Hire a Commercial Debt Collection Attorney

There are many ways in which a debt collections attorney can help. As one of the strategies for commercial collections, your attorney may first send out a well-crafted letter to help move the situation towards a positive resolution. Your attorney may also garnish and freeze the bank account of a debtor. In some cases, they may seek to litigate your case by filing a lawsuit in court to seek a judgment in your favor. Once a favorable judgment is received, a commercial debt collection attorney can also help you navigate the debt collection process.

Why contact a commercial debt collection attorney today?

Thomas J. Maccari, P.A., is an experienced commercial debt collection attorney located in sunny South Florida in the beautiful city of Boca Raton. We have been serving  the entire South Florida area for more than 20 years. We provide personalized attention and real solutions, along with the best legal strategies to collect your debts as quickly as possible. Call us today for a free consultation at (561) 982-9772.

What is Contributing to the Rise in 
Debt Claims?

Debt Collection Attorney Florida

For more than a decade, the American Bar Association and legal advocacy organizations such as the Legal Services Corporation and the National Legal Aid and Defenders Association have all sounded alarms about the worrisome trends being seen in the civil legal system.

Until recently, these discussions were held between court officials, legal aid advocates, and other insiders concerned about the future of the legal profession. In most states, policymakers have not been part of the conversations about how and why civil court systems are changing, even as it may lead to financial harm among American consumers (especially those stuck in long-term cycles of debt), let alone the strategies to address such issues. Which is why Thomas J. Maccari of Boca Raton wants to bring it out into the light.

Key Factors

The increase in debt claims reflect two other significant national trends:

  1. A rise in household debt, and
  2. The emergence of the debt-buying industry

According to a report from the Federal Reserve Bank of New York, American household debt nearly tripled from $4.6 trillion in 1999 to $12.29 trillion in 2016, essentially overlapping with the period of rapid growth in debt collection litigation. While according to the Urban Institute 2018 report, an estimated 71 million people – over 31% of U.S. adults with a credit history – had debt in collections reported in their credit files, while 1 in 8 households across all income levels had an issue or dispute related to debt, credit, or loans. And none of this data takes into account the recent pandemic and the impact it has had (and continues to have) on household debt.

Most household debt in collections stems from a financial shock, like a job loss, illness, or divorce (again, a lot of which was rampant during the majority of 2020), and reflects the broader financial fragility of many American households. 2 in 5 adults nationwide said that they would not have enough cash to cover an emergency expense of $400 without selling personal property or borrowing money, and 1 out of every 3 families report having no savings. Medical debt can be particularly devastating and accounts for more than half of all collection activity.

Naturally, low and moderate-income families are more disproportionately impacted by debt collection. A 2017 Consumer Financial Protection Bureau survey found that people in the lowest income bracket were 3x as likely as those in the highest income group to have been contracted about a debt collection. They also found people with lower incomes also were more likely to have been sued for a debt.

Who is Collecting This Debt?

Creditors who pursue consumer debts into collection include banks and credit unions, hospitals and other medical providers, utility and telecommunications companies, auto and student lenders, and (increasingly) debt buyers. Debt buyers are firms that purchase defaulted debts from the original creditors at a fraction of the face value, sometimes less than one cent on the dollar, and then attempt to collect on the full amount owed.

Debt buyers are key figures in the many debt collection lawsuits and may have played a significant role in the rise of civil debt cases. During the same 20-year time frame that debt claims increased, 1993 – 2013, the total dollar value of debts purchased by debt buyers grew from $8 billion to $98 billion.

Debt buyers employ various collection methods, but they are increasingly relying on litigation. Two of the largest publicly traded debt buyers, Encore Capitol and Portfolio Recovery Associates, saw their legal collections grow 184% and 220%, respectively, from 2008 to 2018.

The Thomas J. Maccari difference

While debt buyers are among the most active civil court users, a debt collection attorney with experience collecting commercial debt in Florida can steer clear of such extreme measures, which is better for your business and better for the collection industry as a whole.

Business is an extension of people. Knowing why people slide into financial hardship makes it easier to know why a business stops paying its debts. When you partner with the Law Office of Thomas J. Maccari, you are working with a full-service law firm that is ready to assist you with all of your commercial collection, lien enforcement and civil litigation needs. Contact us here or call us today at 561.982.9772, and rest assured you are putting a collection professional to work for you!

Collecting Debt During and After a Disaster

 Learn from The Past or Be Doomed to Repeat It Debt Collection During Covid-19

 It is an often-repeated refrain that the past is something from which we must learn. Obviously, COVID-19 and everything it entails creates unique challenges for debt collections. However, the Law Firm of Thomas J Maccari wants you to know how the lessons learned from the most recent recession can help Florida debt collectors now, and what important differences there are to navigate.

Flashback to 2008

There are several things the collection industry did not do during the last global financial crisis of 2008. Specifically:

  • There was no differentiation of customers who would not have been in the situation were it not for the crash. In 2020, that would mean not identifying customers entering collection purely because of COVID-19, and that failure is a mistake.
  • Failure to identify how these customers would perform compared to every-day collections customers:
    • Not profiling behaviors to see how they differed in a collection situation
    • No reviewing how they behaved just before they came into collections
    • Not assessing how they may behave once the crisis that triggered their financial stress started to pass
    • Not profiling their likely return to financial stability and not understanding any differences in their financial morality

By failing to consider those behaviors, the industry did not change their:

  • Segmentation
  • Strategies
  • Treatment paths
  • Policies, or
  • Solution range

In the two years leading up to the crash, the average return to financial stability took 2.5 years. Meaning, if a customer had gone into collections and recovery, it was typically 2.5 years from the point of entering collections to when the debt purchaser would be able to get into a routine payment habit with the indebted customer.

The two years after 2008, that period of return to financial good was reduced to nine months. This is due to customers rolling into collections that were actually good, conscientious customers with a short-term payment problem. They have a very different financial sensibility and profile, and are soon back to employment and earning again, hence the return to good status. Treating these customers with the right outcomes now can generate a lifetime of loyalty.

The difference between the Crash of ’08 and the Coronavirus? The scale of vulnerability in both the short and long term appears greater, unfortunately. 

What’s Next?

Currently, operations are doing their best to deal with a huge increase in customer calls, driven by the respective relief and earning protection programs across the different markets. Lenders and Debt Control Agencies (DCAs) have been trying to maintain business continuity while also dealing with a significant reduction in their workforce and the challenges of the new remote/work from home practices for those who have remained.

Somewhere in that mix, it is important for the team to be asking:

  • What do I need to do today to ensure we are well-positioned to manage what will be a far larger collections portfolio in the near future?
  • And how do we do this without creating bad customer sentiment or losing future good customers?

These two considerations help determine how rapidly and strongly a collections team emerges from the crisis. Those who do not carry out the correct actions today are likely to still be blaming the crisis after it will be, in fact, long gone.

Here and Now

Embrace a digital customer engagement that supports scalability and a seamless, secure journey for the customer, as well as a release of pressure on the call center workforce.

There is important information you can capture today that you may not have chosen to in the past. When the initial tsunami of calls begins to subside, you will have a large book that requires work. Collections, risk and operations executives will require that data to help them:

  • Understand the differences between COVID-19-related debt and non-COVID-related debt
  • Identify the customers that traditional collections risk analytics apply to, and those for whom it is antiquated or redundant
  • Determine the likely return to good financial status by reviewing data such as:
    • Were they in a protected industry?
    • What drove their reduction in income? Was it:
      • Furlough (and if so, with what degree of protection)?
      • Redundancy?
      • Sickness?
    • What has been the true impact on disposable income, and can open banking support and validate the impact?
    • What is their likely return to good trajectory given their household dynamics and industry sector?

No Conclusion Yet (but soon)

The Law Firm of Thomas J Maccari of Boca Raton provides assistance with commercial and corporate debt collection services, lien enforcement, civil litigation and more. Working with our clients across various sectors, we have seen first-hand what best practices in collections looks like today. Give us a call at 561-982-9772 to learn more about how we provide the best solutions to your collection issues, and visit us back here for more tips and solutions to give you the best possible results in the quickest possible time frame.

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TESTIMONIALS
  • Carlos Ballbe’,  BALLBÉ & ASSOCIATES, INC.

    “Tom, I must say that you have proven to me that no collection is impossible. I never thought that some of these cases we placed with you would amount to anything. (more…)

    Carlos Ballbe’, BALLBÉ & ASSOCIATES, INC.
  • Tim Lewis, President, Lewis Rental Properties, Inc.

    “Tom, your staff and yourself have shown over the years that you will go above and beyond in order to resolve the many legal and collection issues our companies have faced. (more…)

    Tim Lewis, President, Lewis Rental Properties, Inc.
  • Bruce Young, Parts Director, Delray Motors Inc.

    “Tom Maccari has been handling some of our most difficult collections and has been successful in collecting a majority of the cases referred to him. (more…)

    Bruce Young, Parts Director, Delray Motors Inc.
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