3rd Party Collection Efforts for Bad Debt

I am curious to find out what outside collection companies everyone is using and what kind of recovery percentages you are seeing on average and what you think is fair to expect in these economic times?

Thanks for any insight!

Hunter-Warfield through RealPage. We just started with HW a month or so ago and have only collected 6%. We are also Student Housing so that brings another element to the table.

Hello Christopher,

First a direct anwer to your question is is it worth it will depend on how much debt you are talking about. If it is small, I would write it off because you can spend more money trying to collect and end up losing even more money. I would just try to sell it after all other attempts have failed. I would not pay some firm big bucks to collect pennies, unless you can work out a deal where they are paid based upon what they are able to collect.

Now the second portion is you may want to look at your screening process and your lease agreement. These two areas may need to be tightened up. Also get your legal and management involved in your internal collection process as well as when you determine to evict. Too much time in certain areas may be given and need to be trimmed down.

My little two cents and I hope it helps!

When a resident gives me a notice to vacate; I immediately give them a copy of the inspection they signed when they moved in. I also give them a list of my standard charges and schedule an appointment with them for an inspection within 1 week of the date they are planning on moving out. This is attended by the head of household, myself, and the maintenance manager. I take pictures of any damage and give them an estimate of the charges based on what is seen. I then add any rent balance owed to this list of charges and subtract the amount of any deposits on file. This gives the resident a realistic estimate of what is owed to either party; with the understanding that the final amount may change when we have possession of the unit and all items have been removed.

I further explain to the resident that I am given 21 calendar days to account for and refund any money owed, but I start the process within 7 days.

If it appears that the resident is going to owe a balance, I set up a payment plan that allows them to pay the money in up to 3 payments, the first of which to be paid (certified funds only) within 30 days. If payments are not made on schedule, the balance is referred to collections. I do the calculations the day they turn in keys and if money is owed by them, I have them sign the payment agreement. I set up a contract with a collection agency that allows me to terminate any action if the resident comes in and pays directly after the file is referred with no charge. I would not agree to a collection effort that costs the property any more than 15% of what is collected.

If a resident is evicted and the court awards a judgement; I let the lawyers handle it for me as they have skip tracers on staff.

That is my 8 pennies' worth.