Corporate fraud cases often involve non-payment issues that can be challenging to address. In this article, we will discuss a Recovery System for Company Funds and provide recommendations for tackling non-payment issues in such cases.
Key Takeaways
- Implement a 3-phase Recovery System to recover company funds efficiently.
- Conduct a thorough investigation and closure if recovery is not likely.
- Consider litigation and decision-making carefully in non-payment cases.
- Be aware of the legal action costs involved in pursuing debtors through litigation.
- Understand the options and costs associated with legal action versus standard collection activities.
Recovery System for Company Funds
Phase One
Within the first 24 hours of initiating Phase One, a multi-pronged approach is set in motion to secure company funds. Immediate action is taken to notify the debtor through a series of letters, starting with the first dispatched via US Mail. Concurrently, the debtor’s financial and contact information undergoes skip-tracing and thorough investigation to ensure all avenues for recovery are explored.
The collection team engages in persistent attempts to reach a resolution, employing a variety of communication methods:
- Phone calls
- Emails
- Text messages
- Faxes
This aggressive contact strategy continues daily for the initial 30 to 60 days. Should these efforts not yield the desired outcome, the process seamlessly transitions to Phase Two, involving our network of affiliated attorneys. The focus remains steadfast on proactive recovery steps, with the ultimate goal of reclaiming owed funds before escalating to more formal legal actions.
Phase Two
Upon escalation to Phase Two, the case transitions to the hands of a specialized attorney within the debtor’s jurisdiction. Immediate action is taken to assert the company’s position and demand repayment. The attorney’s approach includes:
- Drafting and dispatching a series of demand letters on law firm letterhead.
- Persistent telephone outreach to engage the debtor directly.
Should these efforts not yield the desired resolution, a strategic decision is required. The company is presented with a clear path forward, outlined in a communication detailing the challenges encountered and the recommended course of action.
The focus is on clear, decisive steps to ensure the company’s interests are vigorously pursued, while preparing for the potential shift to Phase Three.
Phase Three
Upon reaching Phase Three, the path forward becomes clear. If the investigation suggests recovery is unlikely, we advise case closure, sparing you further costs. Conversely, should litigation appear viable, a pivotal decision awaits.
Choosing not to litigate allows for claim withdrawal at no cost, or continued pursuit through standard collection methods. Opting for legal action necessitates upfront fees, typically $600-$700, initiating a lawsuit to reclaim all dues. Failure to collect post-litigation results in case closure, with no financial obligation to our firm.
Our competitive collection rates are tailored to claim volume and age, ensuring a cost-effective approach to fund recovery.
Here’s a quick glance at our rates:
-
For 1-9 claims:
- Accounts under 1 year: 30%
- Accounts over 1 year: 40%
- Accounts under $1000: 50%
- Accounts with an attorney: 50%
-
For 10+ claims:
- Accounts under 1 year: 27%
- Accounts over 1 year: 35%
- Accounts under $1000: 40%
- Accounts with an attorney: 50%
Recommendations for Non-Payment Issues
Thorough Investigation and Closure
A thorough investigation is the cornerstone of addressing non-payment issues in corporate fraud cases. Identifying the debtor’s assets and understanding the case’s intricacies are critical before proceeding with any recovery actions. If the investigation suggests a low likelihood of fund recovery, closure is the prudent step, sparing unnecessary expenses.
Deciding to close a case after an exhaustive investigation is a strategic move to conserve resources and avoid futile efforts.
When the possibility of recovery is promising, the decision to litigate must be weighed against potential costs and the debtor’s jurisdiction. Here’s a quick overview of the costs involved:
| Jurisdiction | Upfront Legal Costs |
|---|---|
| Debtor’s Local | $600.00 – $700.00 |
The decision to litigate is not to be taken lightly, as it involves upfront legal costs, including court and filing fees. However, if litigation is pursued and is unsuccessful, clients are not left with additional financial burdens to our firm or affiliated attorneys.
Litigation and Decision Making
When litigation is deemed the necessary course, companies face a critical juncture. Decisive action is paramount, balancing the potential for recovery against the costs incurred. The decision to litigate should hinge on a clear-eyed assessment of the debtor’s assets and the likelihood of successful recovery.
Costs are a significant consideration in this phase. Companies must be prepared for upfront legal expenses, which can include:
- Court costs
- Filing fees
- Attorney’s fees
These costs often range from $600 to $700, depending on jurisdiction. It’s essential to weigh these against the potential benefits of litigation.
Companies must also consider the impact of litigation on their operations and reputation. A protracted legal battle can drain resources and distract from core business activities.
Finally, should litigation proceed and fail to yield the desired results, companies must be ready to close the case, absorbing the costs without further recourse. This underscores the importance of a thorough initial investigation and a strategic approach to each case.
Legal Action Costs
When the decision to pursue legal action is made, understanding and managing the associated costs becomes paramount. Upfront legal fees are a reality that cannot be overlooked. These fees, which include court costs and filing fees, typically range from $600 to $700, depending on the debtor’s jurisdiction. Upon payment, our affiliated attorney initiates the lawsuit for all monies owed, inclusive of the filing action cost.
Cost-effectiveness is key when considering litigation. Our competitive collection rates are structured to align with the number of claims and the age of the accounts. For instance, accounts under one year are charged at 30% of the amount collected for 1-9 claims, and 27% for 10 or more claims. The rates increase for older accounts and smaller amounts, reflecting the additional effort required to collect.
It is crucial to weigh the potential recovery against the legal costs incurred. If litigation proves unsuccessful, the case is closed with no further obligation to our firm or our affiliated attorney.
The table below summarizes our rate structure based on the number of claims and account details:
| Claims Submitted | Accounts < 1 Year | Accounts > 1 Year | Accounts < $1000 | Attorney Placed Accounts |
|---|---|---|---|---|
| 1-9 | 30% | 40% | 50% | 50% |
| 10+ | 27% | 35% | 40% | 50% |
When facing non-payment issues, it’s crucial to have a reliable partner to navigate the complexities of debt collection. At Debt Collectors International, we offer specialized solutions across all industries, ensuring your business maintains a healthy cash flow. Don’t let unpaid debts disrupt your operations. Visit our website to learn more about our expert services, and take the first step towards resolving your accounts receivable challenges. Our skilled team is ready to assist you with dispute resolution, skip tracing, asset location, and much more. Act now and safeguard your financial stability.
Frequently Asked Questions
What is the Recovery System for Company Funds?
The Recovery System for Company Funds consists of three phases: Phase One, Phase Two, and Phase Three. Phase One involves sending letters to debtors, skip-tracing, and attempting to contact debtors for resolution. Phase Two includes forwarding the case to affiliated attorneys for legal action. Phase Three provides recommendations for closure or litigation based on the investigation and debtor’s assets.
What happens if the possibility of recovery is not likely in Phase Three?
If the possibility of recovery is not likely in Phase Three, the case will be recommended for closure. In this case, there will be no fees owed to the firm or affiliated attorney. Alternatively, if litigation is recommended and the client decides not to proceed, no fees will be charged. Legal costs will be incurred if the client chooses to proceed with legal action.
What are the upfront legal costs for proceeding with legal action in Phase Three?
The upfront legal costs for proceeding with legal action in Phase Three include court costs, filing fees, etc. These fees typically range from $600.00 to $700.00, depending on the debtor’s jurisdiction. Payment of these funds is required before filing a lawsuit on behalf of the client.
What are the collection rates for DCI based on the number of claims submitted?
DCI provides competitive collection rates based on the number of claims submitted within the first week of placing the first account. Rates vary for different categories such as accounts under 1 year in age, accounts over 1 year in age, accounts under $1000.00, and accounts placed with an attorney.
What actions are taken in Phase One of the Recovery System for Company Funds?
Phase One of the Recovery System involves sending letters to debtors, skip-tracing, investigating debtors’ financial and contact information, and attempting to contact debtors for resolution. Collectors make daily attempts to contact debtors for the first 30 to 60 days.
What happens if all attempts to resolve the account fail in Phase One?
If all attempts to resolve the account fail in Phase One, the case moves to Phase Two where it is immediately forwarded to one of the affiliated attorneys within the debtor’s jurisdiction for further legal action.
