In the world of equipment leasing, dealing with unsettled accounts can be a challenging process. It requires a strategic approach to recover company funds while maintaining professional relationships. Understanding the recovery process overview is crucial for successful outcomes. Here, we delve into the three-phase recovery system designed to handle unsettled accounts in equipment leasing.
Key Takeaways
- The recovery process involves three phases: Initial Contact and Investigation, Legal Action Consideration, and Collection Rates and Fees.
- Efficient communication and thorough investigation are key components of the recovery process.
- Legal action should be considered only after initial attempts to resolve the account have been exhausted.
- Understanding the collection rates and fees structure is essential for making informed decisions.
- Deciding on legal action requires careful consideration of potential costs and risks.
Recovery Process Overview
Initial Contact and Investigation
Upon initiating the recovery process, swift action is paramount. Within 24 hours of account placement, a multi-channel communication strategy is deployed. Debtors receive the first of four letters, while our team conducts thorough skip-tracing to uncover the most current financial and contact details.
Our collectors engage daily, leveraging phone calls, emails, text messages, and faxes, striving for a resolution within the first 30 to 60 days.
Should these efforts not yield results, the case escalates to Phase Two, involving our network of attorneys. They continue the pursuit with legal letters and persistent calls. This escalation is critical, as it signifies the transition from internal recovery efforts to potential legal proceedings.
The following table outlines the initial contact and investigation phase:
| Action Item | Timeline | Method |
|---|---|---|
| First notice sent | Within 24 hours | US Mail |
| Skip-tracing | Immediate | Investigation |
| Collector contact | Daily for 30-60 days | Multi-channel |
If resolution remains elusive, we provide a clear recommendation for the next steps, ensuring transparency and strategic decision-making.
Legal Action Consideration
When internal recovery efforts fail, legal action becomes a pivotal consideration. Deciding whether to litigate involves assessing the debtor’s assets and the likelihood of successful recovery. If the investigation suggests a low chance of collection, closure of the case may be recommended, incurring no fees. Conversely, choosing litigation requires upfront costs, typically ranging from $600 to $700, depending on jurisdiction.
Litigation is not a step to be taken lightly. It demands a clear decision from the lessor: either proceed with legal action, bearing the initial costs, or withdraw the claim with no financial obligation. Should litigation proceed, the associated attorney will file a lawsuit to recover all monies owed, including filing costs.
The choice to litigate is a strategic decision that hinges on a thorough evaluation of the debtor’s financial situation and the potential for recovery.
Collection rates vary based on the age and amount of the claim, as well as the number of claims submitted. Here’s a quick overview of the fees:
| Claims Submitted | Accounts < 1 Year | Accounts > 1 Year | Accounts < $1000 | Attorney Placed Accounts |
|---|---|---|---|---|
| 1-9 | 30% | 40% | 50% | 50% |
| 10+ | 27% | 35% | 40% | 50% |
The decision to engage in legal proceedings should be made with careful consideration of these factors and potential costs.
Collection Rates and Fees
After understanding the collection rates and fees, it’s crucial to grasp the subsequent steps in the recovery process. Decisions made here can significantly impact the financial outcome.
The recovery system is typically segmented into three phases:
- Phase One: Rapid initiation with multiple contact attempts and thorough investigation.
- Phase Two: Legal correspondence and continued communication efforts by affiliated attorneys.
- Phase Three: Final recommendations based on the debtor’s asset investigation and the likelihood of recovery.
In the event of non-recovery, clients are not liable for any fees to the firm or affiliated attorneys, ensuring a risk-free approach.
Here’s a quick glance at the fee structure for different scenarios:
| Claims Quantity | Account Age | Collection Rate |
|---|---|---|
| 1-9 Claims | < 1 Year | 30% |
| 1-9 Claims | > 1 Year | 40% |
| 1-9 Claims | < $1000 | 50% |
| 10+ Claims | < 1 Year | 27% |
| 10+ Claims | > 1 Year | 35% |
| 10+ Claims | < $1000 | 40% |
Litigation is a path chosen only when there is a tangible prospect of recovery. Should litigation be necessary, clients are briefed on the associated upfront legal costs, which typically range from $600 to $700. This transparent approach allows clients to make informed decisions without unexpected financial burdens.
Frequently Asked Questions
What is the Recovery System for unsettled accounts in equipment leasing?
The Recovery System consists of three phases: Phase One involves sending letters to debtors, skip-tracing, and contact attempts. Phase Two includes forwarding the case to an attorney for legal action consideration. Phase Three involves recommendations for closure or litigation.
What happens if all attempts to resolve the account fail in Phase One?
If all attempts fail in Phase One, the case is forwarded to an affiliated attorney in the debtor’s jurisdiction for legal action consideration.
What are the options in Phase Three if the recommendation is litigation?
In Phase Three, if litigation is recommended, the client can choose to proceed with legal action by paying upfront legal costs or withdraw the claim with no obligation to pay.
What are the collection rates for unsettled accounts in equipment leasing?
The collection rates vary based on the number of claims and the age of the accounts, ranging from 27% to 50% of the amount collected.
What are the costs involved in proceeding with legal action in Phase Three?
The costs include court costs, filing fees, and upfront legal fees ranging from $600.00 to $700.00, depending on the debtor’s jurisdiction.
What happens if attempts to collect via litigation fail in Phase Three?
If attempts to collect via litigation fail, the case will be closed, and the client will owe nothing to the firm or the affiliated attorney.
