Credit unions facing non-payment issues require effective strategies to recover company funds and navigate potential litigation challenges. This article outlines a Recovery System for Company Funds and provides Litigation Recommendations to guide credit unions in managing non-payment issues. Key takeaways from the recovery system and litigation recommendations are highlighted below:
Key Takeaways
- Implement a 3-phase Recovery System to efficiently recover company funds.
- Utilize skip-tracing and investigation techniques to obtain debtor information and initiate contact attempts.
- Consider litigation as a recovery option after thorough evaluation of the case and debtor’s assets.
- Understand the costs and implications of proceeding with legal action, including upfront legal costs and collection rates.
- Collaborate with affiliated attorneys for legal support and guidance throughout the recovery process.
Recovery System for Company Funds
Phase One
Initiating the recovery process swiftly is crucial. Within 24 hours of account placement, a multi-channel contact strategy is deployed. Debtors receive the first of four letters, while our team conducts skip-tracing and gathers essential financial data. Daily attempts to engage the debtor through calls, emails, and texts are standard, aiming for a prompt resolution.
If these efforts do not yield results within 30 to 60 days, the strategy escalates to Phase Two, involving our network of affiliated attorneys. This phase is designed to intensify the pressure and signal our commitment to recovering your funds.
The initial phase sets the tone for the recovery process, establishing a foundation of persistent and comprehensive contact efforts.
The effectiveness of Phase One can be summarized as follows:
- Immediate action upon account placement
- Comprehensive debtor information gathering
- Persistent contact through various channels
- A clear pathway to escalation if necessary
Phase Two
Upon escalation to Phase Two, the focus shifts to legal leverage. An affiliated attorney within the debtor’s jurisdiction takes over, initiating a series of actions:
- Drafting and sending demand letters on law firm letterhead.
- Persistent attempts to contact the debtor via phone.
If these efforts fail to yield results, a detailed report outlining the challenges and recommended next steps is prepared for the credit union.
The table below summarizes the attorney’s actions and their sequence:
| Action | Description |
|---|---|
| Letter Drafting | Immediate drafting of demand letters. |
| Phone Contact | Consistent debtor contact attempts. |
Should the situation remain unresolved, the pathway to Phase Three is paved with a critical decision-making point for the credit union.
Phase Three
At the culmination of our recovery efforts, a decisive moment arrives. Decisions must be made based on the outcome of our comprehensive investigation into the debtor’s situation and assets. If the likelihood of recovery is slim, we advise case closure, absolving you of any financial obligation to our firm or affiliated attorneys.
Alternatively, should litigation appear viable, you’re faced with a choice. Opting out of legal action allows for the withdrawal of the claim at no cost, or the continuation of standard collection activities. However, choosing to litigate necessitates upfront legal fees, typically ranging from $600 to $700. These fees cover court costs and filing expenses, initiating a lawsuit to recover all owed monies.
Our fee structure is competitive and varies based on the number of claims and their age. The percentage of the amount collected is our rate, ensuring alignment with your recovery success.
Here’s a quick overview of our rates:
| Claims Submitted | Accounts < 1 Year | Accounts > 1 Year | Accounts < $1000 | Attorney Placed |
|---|---|---|---|---|
| 1-9 | 30% | 40% | 50% | 50% |
| 10+ | 27% | 35% | 40% | 50% |
Note: If litigation efforts do not result in collection, the case will be closed with no further charges from our firm or affiliated attorneys.
Litigation Recommendations
Case Closure
When recovery efforts reach a standstill, case closure may be the most prudent step. It’s a decision that hinges on a comprehensive evaluation of the debtor’s assets and the likelihood of successful recovery. If the prospects are dim, closing the case can save unnecessary expenditure and focus resources on more promising pursuits.
Closure does not equate to defeat. It’s a strategic move, acknowledging when to cut losses and redirect efforts. Credit unions should consider the following:
- The age and size of the account
- The debtor’s payment history and current financial status
- The cost-benefit analysis of continued collection attempts versus closure
In the event of case closure, credit unions are not left with a financial burden. Our firm ensures that you owe nothing for the closure decision, allowing you to move forward without additional financial strain.
Remember, closure is not the end of the road. It’s a pivot, a chance to reassess and apply resources to areas with higher recovery potential.
Proceeding with Legal Action
When the decision to proceed with legal action is made, credit unions must brace for the financial implications. Upfront legal costs are unavoidable, and typically range from $600 to $700, depending on the debtor’s jurisdiction. These costs cover court fees, filing fees, and other related expenses.
Upon initiating litigation, the affiliated attorney will seek to recover all monies owed, including the costs of filing the action. Should litigation efforts not result in payment, the credit union will not be held accountable for any further legal fees to the firm or attorney.
It’s crucial to weigh the potential recovery against the initial investment in legal fees.
Credit unions should be aware of the collection rates, which vary based on the age and amount of the claim, and whether the account is placed with an attorney. Here’s a simplified breakdown of the rates:
- Accounts under 1 year: 30% (1-9 claims) or 27% (10+ claims) of the amount collected.
- Accounts over 1 year: 40% (1-9 claims) or 35% (10+ claims) of the amount collected.
- Accounts under $1000.00: 50% of the amount collected, regardless of the number of claims.
- Accounts placed with an attorney: 50% of the amount collected, irrespective of other factors.
The decision to litigate should be made with a clear understanding of these financial dynamics and the probability of successful recovery.
Frequently Asked Questions
What happens if recovery of company funds is not likely in Phase Three?
If recovery of company funds is not likely in Phase Three, the case will be recommended for closure and you will owe nothing to the firm or affiliated attorney.
What are the options if litigation is recommended in Phase Three?
If litigation is recommended in Phase Three, you can choose to proceed with legal action by paying upfront legal costs or withdraw the claim with no obligation to pay.
What are the rates for collection services provided by DCI?
DCI provides competitive collection rates based on the number of claims submitted and the age and amount of the accounts. Rates range from 27% to 50% of the amount collected.
What actions are taken in Phase One of the Recovery System for Company Funds?
In Phase One, letters are sent to the debtor, skip-tracing and investigation of debtors are conducted, and attempts are made to contact debtors for resolution.
What happens in Phase Two of the Recovery System for Company Funds?
In Phase Two, the case is forwarded to an affiliated attorney who drafts letters demanding payment and attempts to contact the debtor to resolve the account.
What are the possible outcomes if legal action is pursued in Phase Three?
If legal action is pursued in Phase Three and litigation fails, the case will be closed, and you will owe nothing to the firm or affiliated attorney.
