WILMOTH Group Collections Practices

WILMOTH Group Collections Practices

There are several different paths with regard to collections. I will discuss them all in this article. In all cases, one thing is always required. To get any collection agency to start a collection, when it comes to lease related debt, you must have a Judgement (JO) from a court.

So many of these cases never proceed because in order to obtain a judgement, the accused must be served. This must-have a legal right of anybody who is accused of a civil or criminal charge. They must be served and made aware there is a damages claim. This is the most difficult step and what often times prevents a collection from proceeding as many former tenants disappear. When they turn up it is due to filing a bankruptcy case which will mean almost certainly no court will hear the claims of damages or allow for collection.

Also, in all damages cases, the court insists on a presentation of charges. We utilize the Security Deposit Settlement Statement (SDSS) to calculate the disposition of the security deposit. This settlement statement totals unpaid rent and charges along with legal damages that we have the ability to prove to a court were caused by the tenmant (not normal wear and tear). This case package is the document used when we file a damages suit.

These requirements are instrumental to many of the questions we usually receive.

Post-Eviction Collections

A post-eviction collection has the highest percentage that end with a collector. This is because in almost all cases, the damages suit is filed with the evictions suit. The court will present the defendant with both of these suits when they are served (while still living in the rental property). While many tenants never show up in court, the Judge will still set a date for a damages hearing after the evictions hearing. Since WG brings the evictions suit forward as the plaintiff, we also are the plaintiff in a damages suit to follow. For this reason, any damages are awarded to WG from those hearings. It is our contractual obligation to our client (the owner) to return funds collected specific to the terms of the PMA.

Depending on the location of the property affected, will determine the attorney utilized for the lawsuit. Some attorneys provide post-damages collections, while others do not. When the attorney does not, through the years we have found the most effective way to proceed is to utilize an attorney that provides collection services. Therefore, we end up working with different collectors based on the original eviction case.

Stand-Alone Collections

These are the situations where a former tenant has a large enough deficiency in their SDSS that it is deemed worthy to pursue a JO. The deficit versus the cost of the attorney, legal filings, and then the collection agency fees (usually 33-40% of the collected amount) have to be weighed against the amount of the deficit. And remember, just because we present a SDSS amount, Judges frequently scratch items off of the Damages request so collection can be much less than any of us expected. The only fairly safe number to try to collect is unpaid rent. Everything else is up for debate.

So if an owner wishes to pursue such a case, we need to feel that we can get the former tenant served. It is very difficult to locate a former tenant without a SSN or at least a drivers license number. In our underwriting we collect plenty of information so locating a tenant is possible if needed.

But locating the tenant so they can be served, and a Damages case heard, is always the most difficult part of any stand-alone collection. I believe it is fairly known in the tenant community that if you can get approved to rent from any landlord that obtains very limited information, that you should always vacate and never wait for an eviction to be served for all of these reasons.

Most of the time, in stand alone collections with adequate information to try and pursue a damages hearing (and subsequently a JO) one of 3 outcomes occur.

  1. Tenant is located via the state workforce reports (company’s reporting their employees for taxes).
  2. Tenant files a BK and they come up in the legal records.
  3. They disappear and no records are found. Not that hard if they work in fields where they are paid in a way that skirts the state records.

Mind you- this process can take a very long time. Months..even years With no outcome. No hearing. No damages lawsuit ever heard.

Where we recommend pursuing a stand alone collections we are the plaintiff because we have a lease or a PMA with the owner. This does mean the collection agencies and attorneys will not work directly with the owner are that the owner is not their client. WILMOTH Group is their client. But be assured we are under contractual obligation to pay you any funds collected under the terms of our PMA.

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WILMOTH Group is headquartered in Indianapolis, Indiana. We focus on providing creative local solutions for a variety of residential real estate needs including, properties for sale, property management services in Central Indiana.