Doug Masson practices law over in Lafayette, Indiana. He also runs Masson's Blog. From time to time he mentions things relating to his collections practice. I did not see this post from the 27th, but I did today and thought it was great. My practice no longer includes as much consumer collections as it once did, but I handled things pretty as Mr. Masson lays out below. Most collections attorneys I know handle their cases the same way. The following describes how a debtor can screw themselves with a collections attorney and I suggest any debtor having a very long think after reading this:

But some people just don’t get it. They are obstinate. They aren’t going to pay their debt, and they don’t care what a court has to say about it. Nothing gets my hackles up faster than someone telling me what they will or won’t pay. Tell me sweet lies about how you’re really trying, you’re really sorry, but you just got into a jam and really, you’re going to pay next month. But make the lies plausible, make an effort to pay, and above all, do not tell me that you’re not going to pay, and I can’t make you. Because if you do that, I’m going to bring as much of the heavy handed mechanisms of the law to bear as I can to collect the debt. And when I suspend your license for damages from your uninsured auto accident, I’m not going to be moved by your lamentations that you can’t get to work without a license. I’m not going to care that garnishing 25% of your take home pay doesn’t allow you to pay your other bills. If you got to that point, it’s because you didn’t pay the original creditor, you didn’t work out a plan with the collection agency, you didn’t work out a payment plan when I sent you an initial demand, you didn’t work out a payment plan when I filed a lawsuit, you didn’t work out a payment plan when I got a judgment against you, and you didn’t work out a payment plan when I filed the first proceeding supplemental.

I find it odd that many people I talk to receiving Social Security benefits do not know that their money cannot be be taken by a creditor. The governing law bars the assignment or attachment of Title II benefits through execution, levy, attachment, garnishment or any other legal process unless another federal law specifically allows a creditor to take the Social Security money. Taxes and student loans can be offset against Social Security benefits.

For run of the mill debts, Social Security benefits cannot be garnished or attached. That includes bank accounts where the person deposits Social Security benefits. This from the Department of Health Human Services describes the law:

The U.S. Supreme Court has held that Social Security funds deposited into a bank account "retained the quality of 145moneys’ within the purview of section 407[.]" Philpott v. Essex County Welfare Bd., 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973). Courts have also held that the funds remain exempt from legal process even if they are commingled in a bank account with other funds, so long as they are reasonably traceable to Social Security. NCNB Fin. Servs. V. Shumate, 829 F.Supp. 178 (W.D. Va. 1993), affd. 45 F.3d 427, cert. Denied 115 S.Ct. 2616. Since the prohibition on the attachment of SSI payments is based on the same statutory provisions as apply to Social Security, i.e. section 207 of the Act (42 U.S.C. 407), the reasoning in these cases would apply equally to SSI payments.

I give the following checklist to my business clients who need collections work. A good collections case means the client having this information before they send me the file. Too often a debtor is not just a debtor but a true deadbeat. A true deadbeat has no qualms about skipping out on a job or a residence to avoid paying their debts.

1. The person's full name.
2. Person's Social Security Number and driver's license number.
3. Person's address.
4. Person's birth date.
5. Where person was last employed.
6. Copies of contracts and/or invoices unpaid.

Quite a commonsensical list really and all information that every business should have on the people it deals with.

I meant to write about this a week or more ago. While waiting in our County Court One, I watched as the judge dispatched the pro se collection cases. One plaintiff has been in business for many years and I was surprised to see him without an attorney. He proceeded to ask the judge some general questions about the procedures of collecting his judgment.

Too often I see people like this fellow or I get telephone calls from people like him. They have a judgment and the judgment has gone unpaid. Some people operate under the belief that people will automatically pay a judgment. Some people think that the court will insure that the judgment gets paid. They all share one trait - great annoyance at not getting paid. They find the small claims procedure so simple and cheap. Some burst with pride that they did not need to pay for an attorney. They burst with the exact opposite of pride when I explain that they have to work to get their money. That the courts exist to pass judgment but enforcing those judgments is the plaintiff's job.

Collections cases never involve the spectacular trial - generally these are the cases where liability is admitted by the defendant. The real work starts with getting the judgment. The plaintiff needs to find the defendant's assets and then get control of those assets to pay the judgment. All too often, the plaintiff must also find the defendant.

Not all of the defendant's assets are created equal. Exemptions protect the debtor from collections. Indiana law exempts assets from taking by a plaintiff by type of asset and amount of its worth. Indiana and federal law also exempts a certain amount of wages from garnishment.

Wage garnishment is easiest collection method. Easiest if the debtor has a job or does not skip from job to job or gets paid enough to garnish or is not paid in cash. Garnishment requires a lot of paperwork. Assume you know where the debtor works, you need to file a Motion Proceeding Supplemental to Execution naming both the debtor and the employer, a Summons to Garnishee Defendant, and enough copies for both the debtor and the employer. Some counties require an Order to Appear for the debtor. Then you have to show up for a hearing. Now everything could go right at this point - the employer still employs the debtor and the debtor has a garnishable wage. What if the debtor does not appear and is no longer employed? More paperwork, of course. An Order to Show Cause in most counties but not all. That means you need to get some idea of what is the local practice. Another hearing, too. If the debtor does not appear for the Show Cause hearing? More paperwork requesting a body attachment. A body attachment is an Order from the court to the local sheriff to have the debtor arrested for failing to appear as ordered by the court. However, do not think that the sheriff will go hunt down your debtor. They do not do this.

By this time, you have enriched your local Kinko's and spent more than you probably ever wanted to in your local small claims court without seeing a dime. You will need to figure out how much of a benefit this will be to you.

A collections attorney has a large enough practice to subsidize the slow paying cases. By that I mean, there are enough paying cases to justify the attorney to be in the courthouse to work the slow paying or no paying cases.

The fellow I mentioned at the beginning now must figure out the paperwork that he needs. He will have to do this on his own since the court cannot help him fill it out. Hopefully, the will tell him if he has done anything wrong. He needs to get the copies made and delivered to the court. If he does not have enough, he will have to go back and make more copies. Then he will need to make time to appear at more hearings. All this may detract from his current business.

If you are thinking of collecting your own debts, I suggest you think seriously about the true costs to you. I am going to describe what makes a good collections case in another post.