Nathan D. Wirtschafter
Nathan D. Wirtschafter - Making Your Case in California

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The Wirtschafter Law Reporter

Vol. III, Q2

The Wirtschafter Law Reporter (“WLR”) is a quarterly publication of Nathan D. Wirtschafter Corp.

You may reach us by dialing (818) 660-2518, or +972-54-210-1776, or, please visit our website at www.ndwlaw.com, or contact us at ndw@ndwlaw.com.

Thank you,
Nathan Wirtschafter


Coaching Collections

Coaching Collections
In tough economic times, an attorney can provide solid advice to a business owner on how to manage the collection process, but remain in the background. In between the option of costly litigation or the more expensive option of doing nothing, lies a middle ground: having an attorney coach collections.

Challenging economic conditions erode payment integrity. Companies and individuals, facing sinking margins and tough competition, cannot meet their day-to-day cash flow needs. Others struggle under the burden of too much debt or variable interest rates.

However, business owners, who are owed money, can take the failure to pay as a personal affront. The work is completed. It was top-notch, and the customer has profited from the work. A one-month delay has turned into a year, and instead of payment, excuses continue to flow.

The debtor’s procrastination is contagious and the creditor, who never wanted to work as a debt collector, catches it. The unpaid receivables sit in a drawer, or in a corner of the desk, in an unorganized pile. The creditor sends a half-hearted or emotive email every month or so, which is easily rebuffed.

The personalization of non-payment is exacerbated by real economic pressure to pay bills and employees. Creditors end up financing the debtor’s business, without collateral, adding a penalty of frustration to an unpaid receivable. In an unrelated conversation, the unpaid creditor hears the phrase “statute of limitations,” which causes an attack of panic and self-loathing. Besides, the business owner likes taking care of things without attorneys. A few more months pass but nothing happens.

The business owner has a vision that the legal process is an expensive, time-consuming swamp. Often, it is. But there are options besides the swamp and asking an attorney to coach collections can often get the receivable paid fast, with lower legal fees.

Usually, a business owner has a long story to tell. The skilled creditor’s attorney does not really need to hear most of it. The attorney needs to know some basic facts: amount of debt, last date of payment, whether there is a contract and a few other things. The attorney wants to understand the psychology of debtor and the reason for nonpayment. If it’s a corporate debtor, it’s important to understand the conversation inside the corporate office.

Instead of a nasty letter, a creditor’s attorney can help the creditor draft a smart email to the right person. Usually, the response will be helpful and begin a cycle of discussion which leads to payments and eventual resolution.

The smart email allows the creditor to step the pressure up gradually, often leading to payment without direct confrontation. It shows good faith, presents the creditor as reasonable and avoids a combustible response.

The attorney, acting as coach, will often enlist the support of some third party, who has a special relationship with the debtor. The creditor can gradually issue stronger threats via the third party, without risking a loss of face on the part of the debtor.

The attorney can also help manage phone calls. Who to call—often a clerk in accounts payable will give crucial information—and who not to call. What to say, and just as important, what not to say.

If the debtor is truly intransigent: promises not kept, continually putting off payment of any kind and a refusal to communicate, then a tough attorney letter may be the first choice. In other situations, especially true emergencies, the first action should be filing a complaint. But often, there is another way forward.

Moreover, by working with an attorney coach, the creditor learns some of the skills of debt collection. With a better understanding, the creditor might be able to solve the problem next time without counsel from a lawyer.

In between the expensive option of running to court and the more expensive option of doing nothing, there is an effective middle ground, asking an attorney to coach collections.

Nathan D. Wirtschafter, an attorney with significant collections experience, may be reached at ndw@ndwlaw.com or (818) 660-2518. Please contact Mr. Wirtschafter for a free consultation about collecting debts or judgments in California.


 
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