For some companies, selecting accounts to place into collection may be as simple as turning over all accounts that are over 60 days old. For the rest of us, however, if we are to make intelligent decisions about filing suit to collect debts, there are several important considerations to analyze before turning a debt over to a collection attorney. Before placing your receivable with a collection professional, you should consider the following factors:


This is probably the most important consideration to examine before pursuing the debt. After all, if the debtor is not collectible, there is no point in pursuing it. An uncollectible judgment is simply the result of good money thrown after bad. In making this determination, your collection professional should examine the debtor as follows:

  • Is it still in business?
  • Does the debtor still answer its telephone?
  • Does the debtor have assets in its name including a car or real estate?
  • Is there a personal guaranty on the debt? If so, does the guarantor have assets?
  • Are there any tax liens placed on the debtor?
  • Does the debtor have any judgments against it?

The list of things to consider is even more extensive than this. However, the other things that a collection professional would examine are beyond the scope of this article.


Some individual debtors make a living from going into debt and then going out of business. We call these “professional debtors.” An individual may move out of his living quarters and not leave a forwarding address. A company may close its doors and stop answering its phones. While you are not necessarily out of luck if this happens, it is a major factor to consider when deciding whether to file suit.


The fact is that your customer might be temporarily experiencing a cash flow problem. If this is the case, then your company, as its supplier, may exercise some compassion, couple it with caution and emerge from this situation with your receivable paid and looking like a hero to your customer.

The first order of business is to determine whether this entity is still a customer or is now a debtor. The difference being that a debtor is one that you pursue for a debt. A customer is one that you love, honor and respect and help. So how do you go about telling the difference? Its really easier than you think. Ask you customer for cooperation during this difficult time. Ask your customer about what is going on at its business. Do not be afraid to ask for a plan as to how your customer will pay the balance that it owes you. Don’t be afraid to tell your customer that its proposed plan will not work for you. Most importantly, don’t be afraid to ask for a personal guaranty from the company owner after you have come to payment arrangement on the debt. If you do not get cooperation from the customer then it has crossed over and become a debtor. Time is money. If the clock is ticking against your debtor, then it is ticking against your opportunity to collect.


Good question. You have to look at two kinds of costs: out of pocket costs and fees. Out of pocket costs are what you will be charged to pursue the debt. For example some collection agencies will charge a fixed fee for which they will send the debtor a series of dunning letters.

Fees can vary. If the debt and debtor are both large and collection looks likely, you may want to consider hiring an attorney on an hourly basis. Typically, the debt should be over $100,000 and its collectibility should be reasonably assured. Barring this, you may wish to consider hiring your collection professional on a contingency basis so that you have no out of pocket exposure and only pay a fee when you get results.


Placing a debt for collection does not have to be a taxing or agonizing decision. However, in order to make an informed and intelligent decision, the decision maker should have as much information about the debtor as possible. This information includes the location of the debtor, whether the debt is collectible, whether future business from the debtor is possible and what it will cost to pursue. Inasmuch as the decision to file suit must be made relatively quickly, you should look to a debt collection law firm that can provide you with this information quickly.

Kevin M. Taylor is an attorney that specializes in debt collection. He is the founder of Kevin M. Taylor, P.C., Collection Attorneys. Kevin M. Taylor, P.C. has been collecting debts for large and small business for the past 15 years. Kevin M. Taylor, P.C. is at 24901 Northwestern Hwy #306, Southfield, MI 48075. For more information call (248) 223-1999 or visit us at