Collecting debt from customers is never easy, and when dealing with difficult clients, the process can become even more complex. No matter what industry you operate in, collecting debt from uncooperative or evasive customers is daunting. However, it’s possible to handle these situations effectively with the right strategies. This article offers expert advice from a debt collection agency with nearly 50 years of experience on how to collect debt from a client who isn’t cooperating.

How to Collect Debt From a Client Who Isn’t Cooperating

How you approach the recovery process makes a tremendous difference in outcomes when collecting debt from customers who are evasive, resistant, or disputing the debt. Let’s look into some everyday challenging situations and how to deal with clients making the process difficult.

Avoidance and Evasion

One of the most common challenges in collecting debt from customers is avoidance. Debtors may dodge phone calls, ignore letters, or avoid any form of communication. This is especially prevalent in industries like retail and similar small businesses, where customers may feel overwhelmed by their financial obligations and choose to ignore them altogether.

How to Handle It:
Professional debt collection agencies use a multi-channel communication strategy to reach debtors, including phone calls, emails, letters, and even text messages. Diversifying communication methods increase the likelihood of contact.

Additionally, agencies often utilize advanced technology to track and confirm receipt of communications, ensuring that attempts to avoid payment are minimized. For instance, in retail scenarios, customers might avoid phone calls but respond to an SMS reminder about their outstanding balance.

Disputing the Debt

Debtors often dispute the validity or amount of the debt as a tactic to delay or avoid payment. This is a common issue in healthcare and higher education, where patients or students may claim that billing errors or misunderstandings have led to incorrect charges.

How to Handle It:

In such cases, a professional debt collection agency like American Collection Systems (ACS) thoroughly reviews the debtor’s account, ensuring all information is accurate and well-documented before making contact. They also provide debtors with detailed explanations and evidence to support the debt’s validity.

For example, an agency may review insurance claims and medical billing codes in a hospital setting to clarify any confusion. By addressing disputes professionally and transparently, agencies help resolve these objections and move the collection process forward.

Emotional Reactions and Escalation

Collecting debt can often lead to emotional reactions from customers, especially in sensitive industries like healthcare or dental practices. Debtors may become angry, defensive, or even hostile when confronted about unpaid bills.

How to Handle It:

Dealing with emotionally charged situations requires a delicate balance of empathy and firmness. Professional debt collection agencies train their agents in de-escalation techniques, ensuring that interactions remain calm and constructive.

When a debtor becomes upset, the collector’s role is to listen, acknowledge the debtor’s concerns, and respond with understanding while keeping the conversation focused on resolving the debt. For instance, in a dental practice, a patient may be upset about an unexpected bill, but a skilled collector will explain the charges clearly, offer payment options, and maintain a respectful tone throughout the conversation.

Lack of Financial Resources

A common challenge across all industries, particularly in sectors like construction and small businesses, is dealing with debtors who genuinely lack the financial resources to pay their debts. These customers might want to pay but cannot due to economic hardship.

How to Handle It:
Recovery specialists like ACS address this challenge by offering flexible payment plans that align with the debtor’s financial situation. Instead of demanding immediate full payment, collectors might propose a structured payment plan, breaking down the debt into more manageable installments.

This approach increases the likelihood of recovering the debt and demonstrates the agency’s willingness to work with the debtor, which can preserve the business relationship. For example, in a construction scenario, a contractor struggling to pay might be offered an extended payment plan to meet their obligations without jeopardizing their business.

Complex Disputes and Legal Issues

In industries like credit unions and B2B services, debt recovery can be complicated by disputes over contract terms or legal issues. Debtors may argue that services were not rendered as agreed or that there were discrepancies in the contractual obligations. These disputes can significantly delay the debt collection process and complicate efforts to recover the owed amounts.

How to Handle It:
Professional debt collection agencies have the expertise to navigate these complex situations. They start by meticulously reviewing the contract and related documentation to ensure all terms are met and the debt is legitimate. If the debtor raises a valid point, the agency will work with both parties to negotiate a resolution that satisfies the contractual obligations.

In cases where legal action is required, a professional agency can also manage the process, ensuring all steps comply with relevant laws. For example, in a B2B scenario, an agency might mediate between a supplier and a client to resolve a dispute over the quality of goods delivered, ultimately facilitating payment.

Fear of Damaging Customer Relationships

In industries like retail and higher education, businesses often fear that aggressive debt collection practices will damage their relationships with customers or students. This concern can lead to hesitancy in pursuing collections, even when the debt is significant.

How to Handle It:

An experienced collections firm like ACS understands the importance of maintaining positive relationships and is skilled at balancing assertiveness with diplomacy. They use a customer-centric approach, treating debtors respectfully and offering solutions that work for both parties.

For instance, when collecting overdue tuition from a student, an agency might emphasize the importance of maintaining good credit for future financial endeavors and offer a repayment plan that fits the student’s budget. This approach increases the chances of recovery and helps preserve the relationship between the institution and the student.

Maintaining Regulatory Compliance and Ethical Practices in Debt Collection

When collecting debt from customers, you must navigate a complex landscape of regulations and ethical standards. These regulations are designed to protect debtors’ rights while ensuring collection practices remain fair and transparent. Understanding these guidelines is crucial for businesses considering outsourcing their debt recovery efforts to a professional agency.

Key Regulations Governing Debt Collection

These regulations set the standards for conducting debt collection and protect debtors against abusive or unfair practices.

• Fair Debt Collection Practices Act (FDCPA): The FDCPA is one of the most important laws regulating debt collection activities in the United States. It prohibits debt collectors from using abusive, deceptive, or unfair practices when attempting to collect debts. This includes restrictions on when and how debtors can be contacted, such as prohibiting calls before 8 a.m. or after 9 p.m. unless the debtor agrees and banning harassment or threats of violence.
• Fair Credit Reporting Act (FCRA): The FCRA governs how debt information is reported to credit bureaus. It ensures that the information provided is accurate and up-to-date. Debt collection agencies must ensure that they report debts correctly and allow debtors to dispute any inaccuracies. Misreporting a debt can lead to significant legal penalties and damage the agency’s reputation.
• Telephone Consumer Protection Act (TCPA): The TCPA restricts telemarketing calls and the use of automated telephone dialing systems, prerecorded voice messages, and text messages without the recipient’s consent. This regulation is essential in debt collection, as many agencies rely on phone calls and texts to contact debtors. Compliance with TCPA helps ensure that communication is respectful and within legal boundaries, avoiding potential fines and lawsuits.

Remove the Burden of Collecting Debt From Customers With American Collection Systems

Since 1976, ACS has helped our clients across the country maximize their recovery from customers who owe debt but are resistant to paying. Our expert strategies, compliant process, and respectful approach result in exceptional results. Contact us today to schedule an initial consultation and develop a tailored recovery strategy.