2.5 Debtor's Response

• Library: Debt Collection for Virginia Lawyers: A Systematic Approach (Virginia CLE) (2022 Ed.)

2.5 DEBTOR'S RESPONSE

2.501 In General.

Debtors' responses fall into three categories. Debtors will (i) pay; (ii) call or write to make arrangements to pay, attempt to compromise, express inability to pay, contest the account, or set up a defense; or (iii) ignore the demand.

2.502 Debtor's Direct Response.

The attorney's staff should be trained to use any telephone call from the debtor as an opportunity to get collection information from the debtor, if possible. In fact, every contact with the debtor should be used for this purpose. The debtor can be asked direct questions, such as where he or she works, or indirect questions, such as where he or she can be reached during the day.

The FDCPA requires that the debtor be given the short-form "Miranda" warning ¹⁵¹ whenever he or she is contacted by a collector, including an attorney. The warning should be given with every contact. The attorney should provide each employee, including other attorneys in the office, with a card containing the warning. If a debtor calls, the warning should be repeated before the conversation proceeds. If, for some reason, the debtor talks to two or more people in the office, each should politely repeat the warning, prefaced by the statement "Federal law requires that, before speaking with you, we provide you with the following information."

If the debtor pays, there is little to do but account to the client and close the file, keeping a record of the debtor's checking account information if a personal check is received for use in other possible claims against him or her.

If a debtor calls to make payment arrangements, the call can usually be screened and, depending on the debtor's intent, handled by the file clerk or telephone receptionist. The person taking these calls should be taught, among other things, the types of arrangements that are acceptable. While payment in full should be encouraged, other reasonable arrangements are generally acceptable, depending upon the client's authority to the attorney. Some fair guidelines are:

1. Accounts less than $100 should be paid within three months in equal payments;

2. Accounts of $100 to $300 should be paid within six months;

3. Accounts of $300 to $1,000 should be paid within a year in payments of $25 to $100 per month, depending on debtor's ability to pay; and

4. In arrangements that involve several payments, a check is preferable to cash.

Obtaining and maintaining the debtor's checking account information will help the attorney collect if the debtor does not complete the arrangements.

On larger accounts, debtors should be encouraged to execute notes, with interest payable at the judgment rate, payable over such a period as to keep the payment within the debtor's means. The debtor should be encouraged to make terms that he or she can handle and should be made to abide by those terms.

All conversations with debtors and all arrangements should...