Always Collect Your Money Quickly Before a Debtor Becomes Insolvent
Paralegal Services Case Study
Always act promptly to collect an outstanding account. Time is not on your side.
A fuel company retained me to collect a debt of $20,500.00 owing to it from a trucking company, VVR Trucking (a fictitious name).
I wrote to VVR for payment. A voluntary payment arrangement was entered into whereby VVR would pay $1,000.00 per month. The payment arrangement was put in writing in the form of a Promissory Note. My client was happy with that arrangement because it did not want to sue VVR unless it absolutely had to. (Even if it did sue VVR, it is likely that it still would have had to enter into a payment arrangement in order to collect its account.) Over a period of 15 months, my client received payments totalling $15,000.00.
Unfortunately, VVR ultimately filed for bankruptcy before paying out the full amount owing to my client. Because VVR had acted quickly in retaining me, it was successful in recovering $15,000.00 and therefore had to write off the smaller amount of $5,500.00 rather than writing off $20,500.00.
There are two takeaways from this matter:
- Always act promptly to collect an outstanding account. Time is not on your side. If a debtor owes money to you, it may also owe money to other creditors as well.
- Do not let a past due account continue to go unpaid and grow larger. If you are going to end up with an uncollectible debt, it is easier to absorb a small debt that it is to absorb a large one.