Business NotesYesterday I was called upon to make a call for a client who is in the process of winding down his business, selling its assets, and negotiating a work-out with creditors, in lieu of a formal bankruptcy. 

He was receiving calls from what he believed to be an attorney representing a creditor to whom he was in arrears.  The calls were so inflammatory and disturbing that he's been unable to sleep.  In fact, the messages left on his voicemail stated that they would put a lien against his house unless he paid the outstanding invoice. First, let me say that these are very trying times for business owners.  A while ago I wrote an article stating that anyone who has not taken the leap of faith as an entrepreneur, and put their assets and earning power on the line daily, who judges a business owner in default had better walk the walk before stepping into big shoes of judge and jury.  It is a difficult business climate, and not like any we've seen before.

The bank bailout basically moved monies (our monies - taxpayers' monies) from the public sector to the financial institutions, without carefully spelled-out criteria for its use, and with the false expectation that the $700billion that they received in aid would trickle down to also help small business.  As we all know, that didn't happen.  And to add insult to injury, the public sector (aka public schools, libraries, state universities, police and fire departments etc) are experiencing the pain associated with a $700 billion shortfall that was moved from their coffers to the banks'.

Back to my story -- which has a point!  This time I intend to rail against the collections industry -- filled with goons who use the phone instead of clubs, the instrument of choice used by mercenaries to big business at the turn of the 20th century, to instill fear in the hearts and minds of their workers, and now their creditors.

There really are laws in place to regulate the behavior of collectors -- those from the credit card industry calling private individuals as well as those representing business creditors.  However, many of those laws linger in unclear gray areas, and the collectors are well versed in just how far they can go (in other words, just how badly they can harass their debtors) before overtly breaking the law.  And of course, there is little government money available to police their actions and to execute the laws.  On top of that, there is even less public knowledge about the rights of debtors and responsibilities of creditors and their representative agencies

Here are the facts: my client owes a creditor money.  The creditor has tried unsuccessfully to collect what is due - because my client's business declined 40% after “Black October” in 2008, never able to recover since then.  The creditor turned the account over to a nefarious collection agency that, on its website, boasts its practice of litigating to collect maximum receivables for its clients.  Forget the art of negotiating a win-win a la Steven Covey.  This is a ruthless business where winner takes all, at the potential cost of the loser's pride, home, and sanity.

The creditor didn't actually lie - he merely insinuated a course of action that might result from nonpayment.  He left a message to my client that said a lien would be put against his house.  First, there really still is a due process of law - no commercial creditor has the ability to just put a lien against someone and take their house away without following a specific, court-monitored course of action.

The really good news is that in this case, there is a well defined legal process.  First, a complaint must be filed,  by a lawyer, with the court, and a summons issued.  If the summons is hand delivered, the recipient has 20 days to answer the summons and complaint.  The best, most effective action for the recipient is to immediately contact his/her attorney to represent their concerns.  If the summons and complaint arrives via certified mail, the recipient has 30 days to answer the complaint.  (Usually when someone receives a summons they totally freak out, and think they're going to jail - unless. of course, they're experienced in this game - which by the way is not fun, and I don't suggest any of you play it).  Typically within this time, an out-of-court settlement is made.

Because we know that collection agencies sometimes like to insinuate that they're lawyers, and some actually have sleazy lawyers working for them, we decided to return the call to verify that indeed this was a collection agency. 

The man ( not my definition of what a real man is…) who answered the phone tried to bully me, telling me he was the agency owner and he had a hired gun of an attorney on staff, and obviously turned on a recorder, asking me my company name, pretending he couldn't hear me, telling me he'd only speak with my client's attorney.  I hung up, called the original creditor, and left a message that we were engaged to execute a work-out to negotiate a fair settlement.

Hours later I received a call from a kinder, gentler member of the collection firm, whose message said he was asked by the client to initiate discussions to negotiate a reasonable settlement.

The moral of my story?  These are tough times that require creative solutions.  If you have financial troubles, stand up for the hard, dignified work you did.  Don't allow yourself to feel inferior because you hit roadbocks.  Demand fair and honest treatment, and don't just settle out of fear.  Your attorney should be helpful, and if not, refer to the Turnaround Management Association, whose members are expert in handling these kinds of matters.  Don't accept at face value what you hear from dishonest creditors.  There are many honorable companies who run excellent credit departments.  If you are feeling harassed or bullied, then your are being harassed and bullied, and it is unacceptable.  At all costs, defend your honor as a human being worthy of courtesy and respect.


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