Collecting Bad Debt
Collecting a bad debt can be an easy task if you know what to do. There are few things that you may want to take into consideration when collecting bad debt.
You may think that collecting bad debt can make you pay expensive lawyers but don’t worry because there are few ways to collect bad debt with legal action but without the expensive lawyer.
You may opt for small-claims court, or mediation, or arbitration, or collection agencies, or credit action for collecting bad debts. These are much lower in cost than hiring an hourly-rate lawyer to assist you in this ordeal.
Small Claims Court
This is one of the most viable options for collecting debts especially if the money involved is quite small. You just need to ask for the necessary documents and paperwork for the filing of your claims in your local small-claims court. The procedure here is somehow very simple to follow and the court can even provide you with helpful information on how you can get through the whole process. You don’t need to hire an attorney to represent you in the court which can save you money. Also, the filing fees for this kind are also very minimal. The decision can be given after the hearing because the whole process moves more quickly. You can even get a result within the same day of the hearing.
Mediation and Arbitration
Mediation is a dispute resolution that can take 2 forms. For example, some of the small-claims courts allow mediators and rather than engaging into a hearing, the two parties will be asked to work with their hired mediators and settle their dispute. In other cases, the court will provide a mediator for the 2 parties involved and settle their dispute without the actual decision of the court. It is much cheaper and faster than a legal action, it is not 100 percent effective. The arbitration on the other hand, let you work with unbiased arbitrator and the final ruling is given by the arbitrator and both parties must honor and follow it.
Collection Agencies and Credit Action
The task of collecting bad debt can be given to collection agencies. However, your case must have a good chance of getting its payment so that a collection agency will accept your deal. Nevertheless, collection agencies are expensive and can charge half of the amount that they can collect. Credit action on the other hand may help you if you can’t collect a debt. You can just contact the credit bureau of your state and they can give you the means that are necessary to make the debt be a part of the debtor’s credit record. This will give a bad record to your opponent and in the future other lender may refuse to lend them money because of the record.
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