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How to Handle Payment Defaults in Long-Term Staffing Agreements

Handling payment defaults in long-term staffing agreements can be a complex and challenging process. It is crucial for companies to have a well-defined recovery system in place to recover funds effectively. In this article, we will discuss a 3-phase Recovery System for Company funds, outlining the steps involved in handling payment defaults in long-term staffing agreements.

Key Takeaways

  • Implementing a structured recovery system is essential for handling payment defaults in long-term staffing agreements effectively.
  • Phase One of the recovery system involves initial contact with debtors and skip-tracing to gather financial information.
  • Phase Two includes forwarding the case to affiliated attorneys for legal action if initial attempts to resolve the debt fail.
  • Phase Three presents options for closure or litigation based on the investigation results and debtor’s assets.
  • Understanding the costs and rates associated with recovery services is crucial for decision-making in the recovery process.

Recovery System for Company Funds

Phase One

Within the first 24 hours of a payment default, a robust initial response is crucial. The debtor receives the first of four letters, signaling the seriousness of the situation. Concurrently, skip-tracing and investigations commence to uncover the most current financial and contact information.

  • Daily attempts to contact the debtor are made through various channels: phone calls, emails, text messages, and faxes.
  • The goal is to secure a resolution swiftly, within the first 30 to 60 days.

If these efforts do not yield a resolution, the process escalates to Phase Two, involving legal counsel within the debtor’s jurisdiction.

Phase Two

Upon escalation to Phase Two, the case is transferred to a local attorney within our network. This shift signifies a more formal approach to debt recovery. The attorney’s actions include:

  • Drafting and sending a series of authoritative letters on law firm letterhead.
  • Initiating direct telephone contact with the debtor to demand payment.

Persistence is key. The attorney’s persistent attempts aim to secure a resolution without further escalation.

If these efforts remain unsuccessful, a detailed report is prepared for the client. This report outlines the challenges encountered and provides a clear recommendation for Phase Three. The decision to proceed is then in the hands of the client, with full transparency of potential costs and outcomes.

Phase Three

Upon reaching Phase Three, the path forward hinges on the feasibility of fund recovery. If prospects are dim, closure of the case is advised, incurring no cost to you. Conversely, opting for litigation necessitates a decision on your part. Should you decline legal action, you may retract the claim at no charge, or permit continued pursuit through conventional collection methods.

Choosing litigation requires covering initial legal expenses, typically between $600 to $700. These fees empower our attorney to seek full recompense on your behalf. Failure to collect post-litigation results in case closure, absolving you of further financial obligation.

Our fee structure is designed to align with your success. We offer competitive rates that adjust based on the age of the account, the amount collected, and the volume of claims.

Here’s a snapshot of our rates:

  • For 1-9 claims:

    • Accounts under 1 year: 30%
    • Accounts over 1 year: 40%
    • Accounts under $1000: 50%
    • Accounts with an attorney: 50%
  • For 10+ claims:

    • Accounts under 1 year: 27%
    • Accounts over 1 year: 35%
    • Accounts under $1000: 40%
    • Accounts with an attorney: 50%

In the event of litigation, our affiliated attorney will aggressively represent your interests, ensuring every avenue for recovery is explored.

Frequently Asked Questions

What is the Recovery System for Company Funds?

The Recovery System for Company Funds is a 3-phase process designed to recover company funds from debtors. It includes sending letters, skip-tracing, contacting debtors, and involving affiliated attorneys if necessary.

What happens in Phase One of the Recovery System?

In Phase One, letters are sent to debtors, skip-tracing and investigation are conducted, and attempts are made to contact debtors for resolution. If unsuccessful, the case moves to Phase Two.

What occurs in Phase Two of the Recovery System?

In Phase Two, the case is forwarded to an affiliated attorney who sends demand letters to the debtor and attempts to contact them. If no resolution is reached, further recommendations are provided.

What are the options in Phase Three of the Recovery System?

In Phase Three, if recovery is unlikely, the case may be closed with no fees owed. If litigation is recommended, the client can choose to proceed with legal action, bearing upfront legal costs. Collection rates are also outlined based on the number and age of claims.

What are the costs involved in proceeding with legal action in Phase Three?

Clients are required to pay upfront legal costs such as court fees, filing fees, etc., ranging from $600.00 to $700.00. If litigation fails, no fees are owed to the firm or affiliated attorney.

How are collection rates determined in the Recovery System?

Collection rates vary based on the number and age of claims submitted. Rates range from 27% to 50% of the amount collected, depending on the specifics of the accounts.

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