Collections at Christmas Time

Most people in the collection business dread Christmas time. The reason for this is because people believe that collecting money during the holidays is not only extremely difficult, but that it is taboo.

How can we get on the telephone and ask for money when there is Christmas cheer everywhere? How can we levy on the bank account that is going to be used to fund the children’s Christmas gifts or the employee’s Christmas bonuses?

Well, I believe that not only is Christmas time a great time for the collection business, but it is perhaps the single best time all year.

To begin with, this notion of it being taboo to pursue collections during the holidays is ridiculous. If it was not taboo for a debtor to purchase goods or services on credit and then fail to pay for them, it is not taboo to reclaim the money that was taken from you at any time. The debtor is apparently having no trouble sleeping with your money in his pocket, so why should you feel guilt when you go to retake your money.

Now that we have established that it is not a sin to pursue collection matters during the holidays, I will proceed to explain to you why it is in fact the best time of year to do so.

To begin with, most individual debtors that are employed, will be receiving a Christmas bonus on December 24th which will undoubtedly be deposited into his bank account on that same day. If the debtor has refused to cooperate with you in paying off his debt, December 24th is a terrific day to send a registered process server to the bank to serve a bank levy on the debtor’s account. There may not be another day all year that the debtor has a higher balance in his account.

If your debtor is a corporate debtor, you may also be in luck. For both retail and wholesale companies, the holidays are often the most profitable time of year. If a company is in its high season, it is a perfect time to get the debt paid voluntarily or to at least obtain a binding payment plan agreement from the debtor.

Another great aspect about Christmas time, is the fact that many people apply for credit during this time. One of the most common reasons a debt goes uncollected, is because the debtor is a skip.

The creditor runs TRW reports, does DMV checks, and performs Post Office searches but cannot locate the debtor. The debtor may have moved and has not applied for credit since the move, or has not left a forwarding address. None of the information you obtain from the above referenced sources is correct because none of it is current.

However, if a debtor is filling out credit applications to obtain credit to purchase gift items for the holidays, then credit checks will be run and those credit checks will appear on the debtor’s credit report. Once this occurs, all one has to do is call the new credit giver and request the current information on the debtor from the credit application. Creditors usually stick together and will willingly provide you with the information you request.

Once you have located the current whereabouts of your debtor, you can get him served with a complaint or with a subpoena to appear at a judgment debtor’s examination. You may even learn his current employment and bank account information so that you can begin levying on his assets.

As a collection attorney I have another use for December. I use December as a settlement tool.

Now you may ask how in the world could a month be used to settle a case. What I do, is I first figure out which of my debtors have refused to enter into a payment plan and have just been trying to stall repayment of the debt. I get on the telephone with these debtors, and I tell them that against my advise my creditor client has insisted that I call them and offer them a special deal.

This obviously gets their attention. I then proceed to explain to them that if my client can collect this debt before December 31st, then the debt will not have to be charged off on their books and it will have very beneficial tax consequences for my client. Therefore, I inform the debtor that because of this situation, my client is willing to offer a special discount in order to get the money paid back in December.

Since everyone loves a deal, this ploy frequently is successful in getting debts paid voluntarily before year end. In actuality, there are no tax consequences for my clients if the debt is not paid back within the calendar year, but the debtors don’t know this.

In all of the years that I have been a collection attorney, December has consistently been my best month. I take advantage of what this time of year has to offer.

I highly suggest that rather than sitting back and waiting for the new year to begin collecting your debts, you roll up your sleeves and get to work during the holidays. It may turn out to be your best month also.

Happy Holidays!