Our 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 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 with this approach. 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:
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Demand Letter. 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 initiate 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.
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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 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.
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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.
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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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Email: Darrell
W. Cook
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