Commercial Collections Blog

Top 5 Reasons Why Debtors Don’t Pay Up

Consumers sometimes just purposely don’t want to pay their debt in a timely fashion, but sometimes they have legitimate reasons why it’s not been paid. Regardless of the reason, hostile debt collection practices lead to problems. Debt collectors already have a bad enough reputation. After all, people think we harass old ladies and beat up kittens just for fun.

Overly aggressive tactics always backfire, and there is data to back that up. Consumers are fed up with hostile debt collection tactics. According to the Consumer Financial Protection Bureau, consumers have filed 25 percent more debt complaints in 2017 than in the previous year—a whopping 12,293 complaints filed in the first quarter alone. Nearly half of all complaints are about repeated attempts to collect a debt consumers say they don’t owe in the first place.

Remember when you were a kid and you were constantly fighting with a sibling? What did your mom do? She likely intervened as the lone voice of reason, right? And what did she ask you to do? More than likely, she asked you to try to see the problem from your sibling’s point of view.

Top 5 Reasons Why Debtors Don't Pay Up

Consumers often have very reasons for not paying a debt, and at Burt and Associates, we try to see their point of view. So what reasons do consumers give about why they haven’t paid a debt? Here are the top five:

  • The debt is not mine, or I don’t owe the debt. (23 percent)
  • I haven’t been given enough information to verify debt. (22 percent)
  • I paid the debt already. (12 percent)
  • I never received a notice that I owe the debt. (7 percent)
  • Debtors are trying to collect the wrong amount. (6 percent)

People often find themselves in unfortunate circumstances, not of their own making. You get sick when you least expect it and when you can least afford it, or you experience a layoff in an economic downturn. There are dozens of reasons.

It’s true that sometimes people get into debts they can’t handle because they don’t know any better or they’re not good at budgeting. Rather than chastise them, our philosophy is to show them how to make amends and how to fix what is broken.

People who take responsibility for the amount they owe and who sincerely make a concerted effort to pay it back have allowed many small businesses to keep the lights on. We don’t dislike these customers—actually, we want you to win—rebuild your credit store and gain that peace of mind.

We use a different approach and proven tactics that don’t involve harassment, and we have a debt collection success rate that is 33 percent higher than the industry average.

One proven success is the Accounts Receivables Aging tool, a valuable collection schedule that business owners, controllers, A/P personnel, and in-house debt collection departments can use to know exactly how much debt is owed on past due accounts. You can use it to identify customers that have extended past your collection terms, and it gives you valuable insight regarding where overdue amounts are originating. The A/R Aging tool stays up to date and reflects any recent changes in accounts so that you always have the most accurate accounts receivable balance possible. The schedule can help you spot billing problems as well as cash inflow issues early, to avoid bringing unnecessary problems to your business.

Many small businesses are prevented from failing simply by hiring a debt collector. We provide a very valuable service; in fact, debt collectors recover several billion dollars each year from debtors. Small businesses rejoice when they receive monies from accounts they thought would never come out of the “past due” hinterlands. For some businesses, that recovery is the difference between staying afloat or closing their doors forever.

When we work for your business, we look at each debtor and their debt to determine the probability of collecting. Factors like; the debtor’s assets and current financial state, tax liens, unpaid income, and the age of the debt all factor in. We have a Bankruptcy Watch program to monitor debtors in danger of filing bankruptcy; our proactive approach means that we are immediately able to advise our clients on recommended courses of action. Finally, we work with your debtor to resolve their financial obligation to you.

Call us today. Our clients, as well as the commercial collection industry, recognize us for our excellence, and we want to be the unsung heroes of your small business.