You have obtained a judgment in your favour, from the Tribunal administratif du logement or the Small Claims Division and you are now in a much better position to be paid. In some extremely rare cases, you may convene of an acceptable payment arrangement with your debtor. Otherwise, once the statutory appeal period has expired, typically 30 days after the decision, you must decide how to use this powerful advantage now in your possession.
Note that collecting a debt, even if you have a judgment, is never easy and many creditors will never get their due, regardless of the time and effort invested. We obviously believe in the value of our business solution and its superiority quickly becomes evident when compared to your other options.
Your Judgment: You Have Three Choices
First, you might decide to sell your judgments! Some collection agencies specialize in buying debt and will usually offer you a percentage of between 5% and 10% of the value of the amount stated in the conviction. This solution primarily targets the creditor wishing to get rid of a problem and is undoubtedly the least cost-effective option. Before buying your judgment, these agencies establish the likelihood of being paid, using certain metrics, and only proceed with the transaction if they feel they can make a profitable purchase. In other words, the only judgments you will be able to sell are the ones for which you could have obtained much more.
Alternatively, you could have your judgments executed immediately by a bailiff with the goal of receiving 100% of the amount owed, plus interest and other costs incurred, if you meet certain conditions. While this is the most profitable option, at least in theory, it is also the riskiest. At this point in your proceedings, having recently obtained a judgment in your favour, if your debtor has not paid you, he probably cannot afford it, at least for now.
Obviously, the necessary bailiff’s fees to proceed with a seizure are added to the amount of the decision, but if your debtor has nothing to seize, the debt grows and the probability of recovery of this debt decreases. With our experience, and that of our judicial officer partners, we can say with some certainty that the holder of a judgment must know when to be patient to make his efforts profitable.
Fortunately, you have ten years before the statute of limitations runs out. However, ARM Collection Agency offers you a complete solution for managing your judgments, which minimize additional financial risks. In addition to administrative fees serving to partially cover the expenses related to opening a case at the agency, our professional fees are based entirely on a percentage of the amounts recovered.
If you are not convinced that the enforcement of your judgments will yield the desired results, entrusting us to manage them initially is the obvious solution. It is to your advantage to benefit from our resources and our business intelligence, which is unrivalled!
The ARM Advantage
The minimum assignment period is one year when you entrust your judgments to the agency and, as long as we have the mandate, our professional fees are only based on the amounts collected. During this time, ARM Collection Agency performs diligent follow-ups and, if a debt has not been recovered in full, will accumulate and share valuable information on the financial health of your debtor. In other words, if we have not recovered your debts after twelve months of assignment to the agency, you will have all the information in hand to make the next informed decision.
For ARM Collection Agency, it is therefore a frantic race against time to collect your bad debts. Several factors can influence the course of a judgment managed in collections. The following diagram is a simplified representation to help you understand it.
THE USUAL COURSE OF A COLLECTION JUDGMENT
Assignment of a judgment
Our service begins as soon as your judgment is assigned to the agency via our interactive online platform. The information provided is first reviewed to validate its accuracy and ensure compliance with the Act respecting the collection of certain debts. The quality of the information given by the creditor, at the time of assignment, greatly influences the likelihood of recovering the debt.
Using our powerful technology and unique expertise, we survey our extensive database and the credit bureaus to obtain the most up-to-date information about a debtor. We can then update our contact information, assess their financial situation and understand their payment patterns. Each file is assigned an ARM Probability Index (API), which is the index representing our confidence in collecting this debt based on the factors listed above and several others established by our Business Intelligence Analysis Department.
A collection notice is then sent by mail and some debtors will react immediately upon receipt. This is the ideal outcome for both the agency and the creditor. As soon as we have sufficient contact information, which is the case for approximately 95% of our files, the first active collection efforts will begin as soon as the statutory deadline has passed. Otherwise, we initiate a skip tracing process until we obtain new information to begin debt recovery.
First Strategic Phase (Active Collection)
The majority of debtors do not respond to the first collection notice sent, marking the start of our first strategic phase.
Our initial goal is to establish first contact with the debtor in order to present the debt to them and determine their intentions. ARM Collection Agency operates a systemic process in which no means of communication is overlooked in order to contact the debtor, including social networks, emails and known phone numbers.
ARM Collection Agency is both a pioneer and leader in the so-called modern collection industry in Canada and it favours an initial mediating approach. Particularly during this first phase, we strive to create collaborative communication in order to help debtors settle their debts.
This approach is in every way superior to other tactics that over time have tarnished the reputation of the collection industry. Not only do we recover more this way, but we also protect the brand image of our clients and, in turn, their business relationships with their existing and future customers.
This is usually our best opportunity to get a payment or to make a deal, because as mentioned, the likelihood of collecting a debt decreases exponentially over time. When we talk to the debtor, our agents use advanced negotiation skills, learned and honed in regular training, to get them to agree to the obvious solution of paying their debt willingly.
Obviously, if debt collection were easy, no one would need our services! For a number of reasons, whether it is a refusal to pay or a debtor who cannot be reached, this first phase, which generally lasts between 3 and 6 months, often ends with no amount recovered.
ARM Collection Agency contractually requests a minimum one-year assignment period, because, even though time is against us, we are still confident that we can recover some or all of the debt.
Second Strategic Phase (Reactive Collection)
The debtor does not want to pay.
- They usually see their position as morally superior; hence, they rely on ethical principles and their internal logic to justify the non-payment.
The debtor cannot pay.
- Not surprisingly, many debtors incur their debts because they simply cannot afford to pay them.
We have depleted all our contact information.
- This represents approximately 25% of our files. We examine external and internal sources weekly for any new information.
Credit Reports at Equifax and TransUnion
We then report the debt to Equifax and TransUnion, and this information negatively affects the debtor’s credit rating. In some cases, this has an immediate effect and we can re-establish a conversation with the debtor. Most of the time, this strategy will work in the medium term—when the debtor wants a loan or tries to get a new credit card. Paying this overdue account then becomes a necessary step.
Emails, Texts and Postal Payment Offers
Even when our initial efforts are unsuccessful, we do not let our debtor forget we exist! We may deploy automated email or texting strategies, assuming we have the necessary information. Our clients, who wish to maximize their returns, will usually pre-authorize a partial settlement of the debt allowing us, during this second phase, to mail settlement offers or to re-establish communication.
Monitoring the Debtor’s Financial Situation
It is common for debtors’ financial situation to improve over time, as they move away from the point at which they first incurred their debts. Whether through the credit bureaus or any other source, ARM Collection Agency monitors these changes very closely to be the first to benefit from them.
In some cases, even when a few years have passed since the judgment was assigned to the agency, we could quickly start a foreclosure and take advantage of this opportunity before other creditors. ARM collection agency then allows an agility unattainable for an individual without its technology and expertise.
Analyste Senior Risques de crédit
Collection-Recovery Senior Analyst
UPS Supply Chain Solutions