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  • Reporting bad debt

    I think I finally have a deadbeat, which I fortunately never had before. Trivial amount, but an opportunity to learn.

    Do any of you guys report unpaid amounts to the credit reporting agencies? If so, what's the simplest/easiest way?

    Or, do you use a collection agency and have them report it? I think I might prefer this, if anyone has had dealings with a collection agency they like. Recommendations?

  • #2
    Re: Reporting bad debt

    What's the goal; put a ding on the old TRW or get your money? You can't just call Equifax and say someone's a deadbeat, knock 'em down 180 points. Process of collecting will vary depending on state and amount, and w/o making verifiable attempts to collect there's likely little you can "report." Whether you choose a third party or go to small claims will again depend on state/amount and what you wish to gain.
    “I find the curiosity of our men with respect to this animal is pretty much satisfied.”
    ~ Meriwether Lewis

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    • #3
      Re: Reporting bad debt

      What I'm trying to gain is experience for the future. At little risk. Essentially a dry run. The amount is trivial and I might choose to pursue it even though there's no ROI.

      The amount is several hundred and recovery is nice but not essential.

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      • #4
        Re: Reporting bad debt

        I doubt you can just unilaterally report someone to a credit reporting agency. I suspect the major reporting companies have some fairly stiff rules and regulations before they can impact someone's credit. Consumer laws come into play also. I think all you could do is sue and get a judgement and that then shows on their credit report or you can turn the judgement over to a collection agency.
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        • #5
          Re: Reporting bad debt

          Never had one before........99.9% pay up you're doing pretty good. Resentments hurt you more than the other guy.

          Forget about it and move on. Put your efforts into something useful. Give this thing about 6 months and see where it gets you ?
          Steve

          "Get three coffins ready" - A Fistful of Dollars 1964

          http://youtu.be/KZ_7br_3y54

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          • #6
            Re: Reporting bad debt

            Allan, I'm looking for anyone who has experience with the process. I know I can sue, but not sure about all the other avenues. For example, I'm told that late payments on mortgages do show up on people's credit reports without a lawsuit. Just trying to understand the protocol.

            Steve, I agree but this is an exercise in learning.

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            • #7
              Re: Reporting bad debt

              Originally posted by dgbldr View Post
              What I'm trying to gain is experience for the future. At little risk. Essentially a dry run. The amount is trivial and I might choose to pursue it even though there's no ROI.

              The amount is several hundred and recovery is nice but not essential.
              You need to find out what the laws are so your learning experience is thus. You can seek counsel, most likely for a fee from a lawyer, or from a 3rd party collection agency [which process you need to study up on before passing it over unless you trust them - even if you are protected by assigning the debt to them you are still attached at least by name/rep]. Small claims is relatively easy if it's local [I assume it is] and though you'll not [likely] cover the tuition costs it would be IMO the way to go forward to learn.
              “I find the curiosity of our men with respect to this animal is pretty much satisfied.”
              ~ Meriwether Lewis

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              • #8
                Re: Reporting bad debt

                Originally posted by dgbldr View Post
                Allan, I'm looking for anyone who has experience with the process. I know I can sue, but not sure about all the other avenues. For example, I'm told that late payments on mortgages do show up on people's credit reports without a lawsuit. Just trying to understand the protocol.

                Steve, I agree but this is an exercise in learning.
                Consumer laws regulate what shows on credit reports as well as who can report to it and what the process is. That is defined in those laws. Contractors claiming something is a bad debt does not rise to that level. This could be just a run of the mill dispute (I'm sure it's not), that is what consumer might claim. There is a fairly high bar for something to be reported on your credit report.
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                • #9
                  Re: Reporting bad debt

                  Visit the credit bureaus website as a biz consumer of their services. There, for a monthly fee you can access others credit reports if you have the proper sign off and also report late / no payments. Most likely yours is not consumer debt or meets the legal paperwork requirements to sustain a commercial paper debt or otherwise thus a reporting agency doesn't want any part of it.

                  Obviously in these situations you will look at what you did and how to do better ? Sign up with the credit reporting bureaus / finance co's. Get your paperwork up to consumer / commercial credit standards like these siding and window co's - have all your customers sign it - then you may have something ?

                  Other than that its small claims. Its sort of like being partly self insured in a way. You don't want to do as above for $1200 - $2000 yr cause you probably dont need it. You dont want to spend a few hundred either in sm claims ? What is that you want to do ?

                  Addl - If you want to learn something then its seeing these things coming and adjusting / having ways to deal with it......in a useful way. Long story short if they can't or won't pay and there is some legitimacy you get them to sign a promissory note and accept what ever you can !! I had a customer start out at $75 mo. They couldn't pay that...then $25 month. Took 18 months to pay off but they did. It was a divorce deal for them.

                  You can then sue on the promissory note. On mine I sent the lien notices, notice of foreclosure lawsuit, etc. It did nothing. A lawyer is going to advise you to do the same ? How do you think collection lawyers work ? They arrange for payments over time to them.

                  I don't know if these suggestions are a fit for you generally but since 96% of all bad debt is never paid I'd give it a look.
                  Last edited by Happy Home; 04-26-2012, 12:30 PM.
                  Steve

                  "Get three coffins ready" - A Fistful of Dollars 1964

                  http://youtu.be/KZ_7br_3y54

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                  • #10
                    Re: Reporting bad debt

                    IIRC, it also depends on your contractual relationship with the debtor. I don't think standard construction contracts contain the correct verbiage in order to conform to the consumer laws Allan mentioned. For example, the 3 pages of fine print a credit card company sends out whenever they change the terms on you. You agree to these terms or close your account.

                    Another tactic would be a lien, either a mechanic's or materialman's lien on property. Mechanic's liens are fairly easy to file. I've had to do this twice to reserve my spot in line in bankruptcy proceedings. My attorney charges about $100.

                    A prerequisite to filing a lien (in Colorado at least) is sending out an "Intent to lien" 10 days before the actual lien is filed. I do this myself. Often it is amazing how fast you get paid when they receive the Intent to Lien.

                    I think you can also file liens on a person without there necessarily being property involved. I had a friend that had a tax lien incorrectly filed against him. Basically it makes it public record that a lien and/or problem exists. His credit did not get dinged, but it was also quickly corrected by the state because it was in error. Not sure if that is a government only thing...

                    In Colorado, mechanics liens can only be filed within a 120 day window. Some states are 90 days, so don't wait. I worked with a developer for a while to help him out because he had been good to us, but it put us outside the window and I lost all leverage. I ended up getting paid 18 months later, but probably should have filed a lien right away.

                    I would have an attorney file the lien because you can also be sued for filing a Spurious Lien, so you want to make sure your ducks are in a row.
                    Bill

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                    • #11
                      Re: Reporting bad debt

                      Here I can't file for a lien w/o having that possibility spelled out beforehand - the work agreement or contract. We have yet to be told what kind of agreement was in place or what kind of bad debt it is we're being asked to comment on. Did he sell his snow blower on craigs list to an acquaintance trusting full payment in future; get lucky at poker night but had to take an IOU on a napkin; make some minor repair with just a verbal ok? Or maybe he's on the other side of the coin getting suggestions of what to be prepared for? The plot thickens. DG?
                      “I find the curiosity of our men with respect to this animal is pretty much satisfied.”
                      ~ Meriwether Lewis

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                      • #12
                        Re: Reporting bad debt

                        Originally posted by MarkMc View Post
                        Here I can't file for a lien w/o having that possibility spelled out beforehand - the work agreement or contract. We have yet to be told what kind of agreement was in place or what kind of bad debt it is we're being asked to comment on. Did he sell his snow blower on craigs list to an acquaintance trusting full payment in future; get lucky at poker night but had to take an IOU on a napkin; make some minor repair with just a verbal ok? Or maybe he's on the other side of the coin getting suggestions of what to be prepared for? The plot thickens. DG?
                        What state are you in, Mark?
                        Bill

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                        • #13
                          Re: Reporting bad debt

                          Mark:
                          No, it's pretty routine. It was a consultation for a person buying a property. Mostly an evaluation of the work needed to renovate/improve the property. Appears the customer was surprised/disappointed to find out the property needs more work than they anticipated. Not sure if they're still buying the property. No response to invoices and attempts to contact.

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                          • #14
                            Re: Reporting bad debt

                            Originally posted by DWBuilder View Post
                            What state are you in, Mark?
                            Somewhere between confusion and denial, usually. Not meaning to be dismissive, but misguided or sincere I do have reasons for attempting to maintain anon. And no, the ankle bracelet does not factor in to it. ;
                            “I find the curiosity of our men with respect to this animal is pretty much satisfied.”
                            ~ Meriwether Lewis

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                            • #15
                              Re: Reporting bad debt

                              Originally posted by dgbldr View Post
                              Mark:
                              No, it's pretty routine. It was a consultation for a person buying a property. Mostly an evaluation of the work needed to renovate/improve the property. Appears the customer was surprised/disappointed to find out the property needs more work than they anticipated. Not sure if they're still buying the property. No response to invoices and attempts to contact.
                              So what form of agreement is/was there? Anything on paper? Sounds like small claims is the place to be. Most likely part of the process after making the claim will be some form of official letter/notification of and that's as far as I've ever had to take it. Your state/locale will define the process and all that info should be readily accessible. Start at the county CH and go from there.
                              “I find the curiosity of our men with respect to this animal is pretty much satisfied.”
                              ~ Meriwether Lewis

                              Comment

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