How to collect bounced check

I received a text message couple of weeks ago, from one of this column’s readers, asking me for some advice regarding how to collect a bounced check, which in this case is more than a year already. The amount is quite substantial as this is over Php 400,000. The reader is asking me what collection steps or process could possibly be taken to “counter” the so many alibis already given.

Well, honestly speaking, there is no “sure fire” collection strategy you could use to effect collection of delinquent account.  For me, collection is more of “an art”. Collection is not a one shot, single process effort, but should be regarded as a series of steps aimed at obtaining payment in full.

However, the hard truth of the matter is that; if the debtor is really that “rotten” or what we normally call “bad debtor”, your chance of personally collecting the amount is really slim. I strongly advise that in this case, you must seek professional help/ assistance to escalate your collection effort and to have better collection pressure. However, if you feel that you could still personally collect and especially if you are still in communication with the debtor the following “collection tips” could help you in getting some positive response.

First, offer debtor a clear choice of actions. Most collection negotiations are based on threat such as: “if you will not pay, we will endorse this for legal action” or simply, “we will just see you in court”.... why not instead of stating the obvious, let the debtor be given alternatives and let him choose his/her actions, surely by using diplomacy and tact rather than threat, even though you are serious in pursuing legal action, it does not destroy any relationships.

Second, endeavor to get a reasonable short repayment program because a long one is bound to fail. Sometimes, some would just agree on anything just to get a payment proposal. Getting a payment proposal is one thing, but actually being paid is another.

Third, plan a “psychological war” collection effort. To name a few: (1) appeal to justice; fair play; sense of duty and cooperation. (2)  Appeal to “pride” it may refer to vanity, good credit and reputation; however, never let your own pride to get in the way. You could also instill fear by telling your debtor that you will report the matter to a credit bureau such as CIBI Information, which in return might have a negative affect in his/ her credit reputation.

Fourth, look and search for vulnerable areas or “Achilles heel." Most debtors are vulnerable to something, it is now your keen sense of information and networking that will give you this information.

Fifth, ask for third party assistance within the industry, family or community. In the Philippines we call this “padrino” system. This is much effective if one administering is closer to the “padrino” rather than the debtor to the “padrino”. If the reverse is the scenario, it will surely not be that effective.

Finally, when all things fail and legal action is decided upon to enforce collection, proceed as fast as you can, because a debtor generally does things inimical to creditor’s interest.  Remember, collection is an “art”. The more “artistic” you are, the more effective you will be.

(Mr. Ed F. Limtingco can be reached at 0917-7220521 or at [email protected])