Most Americans don’t pay hard cold cash for anything. They instead take out loans or use credit cards to make big purchases. These individuals then make small payments across a few months or years until they ultimately pay an item off.
A downside to giving debtors an extension to pay for those big items is that something else inevitably comes up that they need to pay for. This is often why they default in making payments. There are some strategies that you can employ as a creditor to give yourself the best chance of collecting what you’re owed.
One of the best things that you can do before you even decide to extend credit to someone is to thoroughly vet them. You should make sure to extend loans to individuals who have stable jobs, successful payment histories and a solid plan for the funds. You should ask your potential customers to put up significant collateral as proof that they have skin in the game as well.
Your debtor should reach out to you as soon as they fall behind in making payments on their loan or card, yet many don’t do this. You should offer a sympathetic ear if your customer does reach out to you about a hardship that they have.
You must anticipate receiving this type of communication and have a strategy in mind for working with your debtor. You may find it beneficial to offer some type of flexible payment options to your customers to allow them to better manage their debt obligations to you. This may include deferring payments or allowing them to make reduced ones until the balance is paid off.
If you’re having a particularly hard time in getting a debtor to pay and you’re tired of managing the account yourself, then you may want to turn it over to either a collection agency or attorney to handle. Either one of these may be able to employ different tactics to try to convince your debtor to pay up.
A Jackson judge may want to see that you’ve pursued all of these before allowing you to move forward with this debt recovery. An attorney can help you decide what avenue is best for your Tennessee company.