A Positive Approach to Debt Recovery

Mr. Anderson received dental work and insurance paid less than expected leaving him responsible for the remaining balance of $450.  Unfortunately, he disputed the charges and the balance became past due.  The account was then turned over to a collection agency and $350 was added to the balance as a collection fee.

Mr. Anderson disputed the balance and the additional amount saying he didn’t owe that much.  Now, if he didn’t sign anything stating he would be responsible for additional collection fees, then the client would not be able to charge those fees.  However, if he did sign a document accepting responsibility for any additional collection fees or costs, those fees could be added to the original balance.

Sure enough, the client had him sign a financial agreement sheet that shows he is responsible for all collection and attorney fees.  The account was then forwarded to an attorney and the claim was taken to court.  A judge reviewed the documentation and stated the client is not able to charge unreasonable fees and only awarded the original balance of $450 as a judgment.

What happened?  The client had a signed document saying the patient would be responsible so he should pay, right?  The answer is yes and no.  The documentation that was signed left an open-to-interpretation statement allowing the client to add pretty much whatever they felt was necessary to the past due debt.  According to a ruling from the Eleventh Circuit of Appeals in 2014, the language in the contract signed needs to be specific in identifying the type of charge and what amount is being added to the past due debt.  Also, the amount added needs to be reasonable.

One of our collection attorneys stated, “I always say that the best language lists a specific amount AND the moment the amount becomes due.”  Statements like “all collection and attorney fees” is not specific enough to avoid the judge removing the additional fees altogether.  Rather statements like these are considered more acceptable:

 “In the event of your default, you agree to pay actual attorney fees and court costs, in addition to a collection fee of 33% which will become due once your account is placed with a collection agency or attorney/law firm.”

    A statement like this makes any additional fees that may be added very clear and ascertainable.  The percentage is exact and the additional costs/fees are clear.  Most clients understand this and have some sort of statement saying the patients/customers will be responsible for these additional charges.  Make sure your financial statement follows these guidelines to help ensure recovery of these additional fees and costs.