What are some informal collection procedures I can use to avoid court costs?

Question

What are some informal collection procedures I can use to avoid court costs?

Answer

When you are looking to collect an unpaid debt; whether it is a small amount of money that could be handled in Small Claims Court; or a larger amount that would require a more formal proceeding, there are some things that you can try first. If this is a friend, family member, neighbor, or someone that you intend to continue having a relationship with; you might want to try and talk to them and see if you can come to some sort of a payment agreement.

If this has been unsuccessful or if there is no continuing relationship with the person or business, then your next step is to send them a "demand letter". A demand letter will address the facts, and the reason that the debtor owes you money. It will demand that the person pay; offer options for payment; give a time frame that must be adhered to; and will then list the consequences of failing to do so. These two options, and perhaps a follow-up phone call, will not cost you more than the cost of a certified letter, but can be enough to get some negotiation going.

Keep in mind that should you have to go to Small Claims Court, even having a good case will not mean you will collect your money. The court can award you the judgment, but they cannot force the debtor to pay. You will be on your own and garnishment, collection agencies, and liens can all be costly and time consuming. If you need to know more about writing a demand letter or other options you can pursue, seek the advice of a debt settlement attorney.

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