“What is a Property Manager to do when a tenant stops paying?”

Note: Advice given herein does not constitute the formation of an attorney-client relationship. Further, any communication with the author may not necessarily be secure or confidential, and initiating contact with the attorney does not create an attorney–client relationship.

3rd in a multi-part series…What is a Property Manager to do?

By: Mitzi Hall, The Hill Law Firm

Sometimes You’re a Creditor

If your tenant skips out without paying rent, or if they damage your property and the security deposit doesn’t cover it, you’re a creditor and you need to get paid, right?

So…how do you get paid? What’s the process for getting paid? I believe that a local law firm can help you get paid more quickly, easily and cheaply than a collection agency. Why? Because there are problems associated with collection agencies and many times the best thing to do is to have a local law firm specializing in collections handle all of your needs, from lease violation notices, to getting possession of your property back, to collecting on past due amounts owed. A law firm should also be able to help you avoid other potential legal pitfalls during the eviction and collection process.

Law Firms Can Be Better for Creditors

Both collection agencies and debt collection law firms perform similar roles by pursuing unpaid debts. Additionally, both are regulated by the Fair Debt Collection Practices Act. However, the manner in which the agency or firm collects debt can be different, along with other characteristics of the firm or agency.

It is important to understand the differences, similarities and limitations of either option before a business turns over its accounts receivable to either one. Some important considerations include:


Collection agencies may charge a series of fees, based on the work and response to their efforts. The creditor pays a fee to retain the collection agency. This fee is based off of the balance. Fees can be 50 percent or more. A higher fee is charged if the debt collection agency must turn the debt over to a debt collection law firm so that both entities are able to profit off of the account. Additionally, the age of the account and the balance can affect the fee charged.

Debt collection law firms often charge a set fee, typically 33 percent. The creditor may be charged fees associated with taking the debtor to court, but these fees are often tacked onto the judgment and then repaid by the debtor to the creditor. Some debt collection law firms take debts on a contingency fee basis, meaning that the creditor is not charged for their services until the debt is collected on.


The primary way that collection agencies and debt collection law firms differ is in regard to the actions that they can take. Collection agencies primarily collect debts by making continued contact with a debtor in order for the debtor to pay off all or a portion of the debt owed. These communications may be through letters and telephone calls. While debt collection law firms can also take these steps, they can also take further actions to pursue the debt.

Debt collection law firms employ lawyers who are equipped to take the case to court. A lawyer can file the necessary paperwork and effectuate legal service so that the debtor knows that a court date on the matter is pending. Many times such lawsuits result in default judgments against the debtor. The debt collection law firm can then take additional action once it has a judgment, including garnishing the debtor’s wages, placing a lien on un-exempted property and collecting profits from rental or business income.


A primary consideration when making this decision is how quickly the entity may be able to recover the debt. In many cases, collection agencies attempt to collect the debt but must then turn it over to a debt collection law firm for legal action. This results in a lot of lost time and opportunity to collect on the debt.  Additionally, collection agencies may be hesitant to turn the debt over even if there is no sign that they will be successful because it must then pay a substantial fee to the debt collection law firm. This means that a collection agency may have debt accounts for months or years without ever having success.

In contrast, a debt collection law firm may be quicker to sue on the unpaid debt and therefore recover it faster than a collection agency. Debtors who understand the limitations of collection agencies may be more afraid to ignore communications from lawyers if they are afraid that they will be sued.


Utilizing a law firm that specializes in evictions and collections may save you valuable time and money when trying to evict a troublesome tenant and collect on past due rents.

Have Questions or Just Want to Know More?

You’re welcome to contact the author anytime:    Mitzi Hall mitzi@hillfirmlaw.com 615-815-1758