Collecting overdue payments in commercial real estate finance can be a challenging process. It requires a strategic approach and a well-defined recovery system to ensure the successful retrieval of company funds. In this article, we will explore a three-phase Recovery System designed to assist in the recovery of overdue payments in commercial real estate finance.
Key Takeaways
- Utilize a three-phase Recovery System for efficient collection of company funds in commercial real estate finance.
- Implement thorough investigation and analysis of debtor’s assets to determine the likelihood of recovery.
- Consider the options of closure or litigation based on the investigation results.
- Understand the cost structure for legal actions and collection rates based on the age and amount of accounts.
- Maintain communication and follow-up strategies to maximize the chances of successful debt recovery.
Recovery System for Company Funds
Phase One
Within the first 24 hours of initiating Phase One, a multi-faceted approach is deployed to secure overdue payments. Immediate action is taken to send the first of four letters via US Mail, ensuring the debtor is aware of the outstanding balance. Concurrently, skip-tracing and investigative measures are employed to gather the most up-to-date financial and contact information available.
Our collectors engage in persistent efforts, utilizing phone calls, emails, text messages, and faxes to reach a resolution. Daily attempts are made for the initial 30 to 60 days, aiming to establish a dialogue and negotiate payment. Should these attempts not yield results, the process transitions seamlessly to Phase Two.
The goal is clear: to establish contact and secure payment swiftly and efficiently. If resolution is elusive, escalation to legal involvement is prepared without delay.
The following table outlines the initial collection rates based on the number of claims and age of accounts:
| Claims Submitted | Accounts < 1 Year | Accounts > 1 Year | Accounts < $1000 | Attorney Placed |
|---|---|---|---|---|
| 1-9 | 30% | 40% | 50% | 50% |
| 10+ | 27% | 35% | 40% | 50% |
Phase Two
Upon escalation to Phase Two, the case is transferred to a local attorney within our network, initiating a more assertive approach. The attorney’s first action is to draft a series of demand letters on their law firm letterhead, signaling the seriousness of the situation to the debtor.
The attorney’s involvement adds legal weight to the collection efforts, often prompting a quicker response.
Simultaneously, the attorney and their team begin persistent attempts to contact the debtor through phone calls. This dual-strategy of written and verbal communication is designed to maximize the pressure for a resolution.
If these intensified efforts do not yield results, a detailed report is prepared for the client, outlining the challenges encountered and providing a clear recommendation for the subsequent phase. The decision to proceed further rests with the client, ensuring transparency and control over the collection process.
Phase Three
At the crossroads of Phase Three, the path forward is clear-cut. Decisive action is required based on the comprehensive evaluation of the debtor’s financial landscape. Two distinct recommendations emerge:
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Case Closure: If recovery appears improbable after meticulous analysis, we advise shutting down the pursuit. This outcome incurs no fees for our services or those of our affiliated attorneys.
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Litigation: Should the evidence suggest a favorable outcome, the choice to litigate rests with you. Opting for legal proceedings necessitates covering initial legal expenses, typically between $600 to $700. A detailed breakdown of these costs is provided for transparency.
Upon choosing litigation, our affiliated attorney initiates a lawsuit to reclaim the full spectrum of owed funds, including legal costs. Failure to recover through litigation leads to case closure, absolving you of further financial obligations to our firm or attorney.
Our fee structure is competitive and scales with the volume of claims. Here’s a concise overview:
| Claims Submitted | Accounts < 1 Year | Accounts > 1 Year | Accounts < $1000 | Attorney Placed |
|---|---|---|---|---|
| 1-9 | 30% | 40% | 50% | 50% |
| 10+ | 27% | 35% | 40% | 50% |
The rates are contingent on the age of the account, the amount collected, and whether an attorney is engaged. This tiered approach ensures that our clients receive the most cost-effective service for their specific situation.
Recovery System for Company Funds
What is Phase One of the Recovery System for Company Funds?
Phase One involves sending letters to debtors, skip-tracing, contacting debtors, and attempting to resolve the matter within the first 30 to 60 days.
What happens if Phase One attempts to resolve the account fail?
If Phase One attempts fail, the case moves to Phase Two where it is forwarded to an affiliated attorney within the debtor’s jurisdiction.
What is Phase Two of the Recovery System for Company Funds?
Phase Two includes drafting demand letters, contacting debtors, and escalating the matter with the assistance of an affiliated attorney.
What are the options in Phase Three of the Recovery System for Company Funds?
In Phase Three, the options include closing the case if recovery is unlikely or proceeding with litigation, where upfront legal costs may apply.
What are the rates for debt collection services provided by DCI?
DCI offers competitive rates based on the number of claims submitted and the age and amount of the accounts, with rates ranging from 27% to 50% of the amount collected.
What happens if litigation fails in Phase Three of the Recovery System for Company Funds?
If litigation fails, the case will be closed, and the client will owe nothing to the firm or affiliated attorney.
