Sometimes those interruptions are the result of non-paying customers, forcing you to play debt collector. This is a tough position to be in as a small business owner because it can break down friendly business relationships with your customers and be both time consuming and expensive. There are several fundamental steps that you can take such as using written contracts, keeping good records, and having regular collection practices in order to minimize the impact of non-paying customers on your cash-flow.

Use Written Contracts All the Time

Using a sound written contract for every customer purchase is a big key to avoiding a drawn out collection dispute and may even be required by law. In Pennsylvania, purchases resulting from contact with a customer at their home, even if over the telephone, will require a written contract as do all home improvement transactions. A few must-have provisions in the contract are the customer’s name and address, the fee charged (with interest if not paid) for services provided, the dates of delivery or service, and a fairly specific description of the services and materials provided. The customer and spouse, if any, must also sign the contract. One very helpful item to include in the contract is authorization to debit a bank account or credit card for payment of the contract (an “auto-debit” arrangement). If auto-debit is not possible, simply having authorization to debit those accounts when the customer is behind on payments could save you time and expense in collecting the debt.

Keep Good Records

During the process of debt collection, you may be called upon to justify your charges. Having good records is vital for that purpose. Keep the original signed contract on file along with other documents relating to the customer matter. Regular invoicing should be performed and those documents kept on file as well. Keep notes on telephone conversations with your customers. Finally, it is a good idea to keep copies of checks or bank account information provided by customers (but only until payment is received in full). Bank account information is particularly helpful in the collection process after a lawsuit is filed and judgment entered in your favor. Customers do not always cooperate and pay the judgment. It may be possible to require the customer’s bank to transfer money from a customer’s bank account to you without the customer’s cooperation.

Establish a Collection Policy

You should have an internal process in place for debt collection and stick to it. Decide in advance how and when you will address delinquent accounts. Assign a person in the office to make a telephone call if the account is in arrears for 90 days. If your customer does not respond to the call, send a letter with a deadline for response. Suggesting a payment plan to the customer is always a good idea. If these attempts are fruitless consider having an attorney send a letter. Filing a lawsuit is an option but you should first consider the cost of a court proceeding versus the possibility of collecting on the debt. If you do file suit, make sure you are able to commit the necessary time, money and energy required for the duration of the proceeding, including appeals filed by the customer.

Call Us for Help

Welch, Gold & Siegel, P.C. provides consulting and legal services to entrepreneurs and small business owners. Whether you need help forming your business, writing your customer or business contracts, need practical advice for solving business problems, or have compliance issues you’d like to clarify, our attorneys are ready to help you grow your business. Call us 800-375-3089 for a consultation.

Money is tight today and many families are looking for ways to cut their budget without sacrificing too much. One place to avoid scrimping and saving is with insurance. Insurance may seem like an expenditure without return but it’s important to remember a major aspect of all types of insurance – especially auto insurance – is protection against the financial hardship of a catastrophe or major injury. After all, the main purpose of auto insurance is protecting you and your family in the event of a tragedy not just “keeping legal”.  A major car accident is something  you hope to never face but if it happens, and you are insured, the impact of the disaster is not nearly as bad and your life can be quickly back on the track.

There is more than a remote possibility that you’ll be involved in a car accident and need to use your auto insurance.  According to a recent Pennsylvania Bureau of Highway Safety and Traffic Engineering report:

• 1 out of every 43 people in Pennsylvania was involved in a reportable traffic crash;
• 1 out of every 140 people was injured in a reportable traffic crash; and
• Each day, 243 persons were injured in a reportable crash (about 10 injuries every hour).

These statistics show how important it is for you to choose insurance coverage with adequate protection.  The most important decision about auto insurance coverage you must make is between Full Tort and Limited Tort coverage.

FULL TORT

With Full Tort, you are allowed under law to seek money for your pain and suffering due to any injury you sustain in an auto accident. This is, of course, provided that someone else is at fault for the accident.  In Pennsylvania, the only way for an individual and family to be protected is to pay the higher premium required for full tort coverage.

LIMITED TORT

When you choose Limited Tort, you give up the right, for yourself and everyone in your household, to receive compensation for certain injuries that you might suffer when injured in a car accident.  Even a car crash that seems minor can lead to injuries and long-term disabilities that last for months or even years.  Many people are unfamiliar with insurance terms and don’t understand what it really means to have Limited Tort auto insurance. They choose Limited Tort because it saves them a few dollars (approximately 15% on their premiums).  Limited Tort not only puts you and your family at risk in your own car, but it also applies when you or your children are injured as passengers in someone else’s car or even when injured as a pedestrian.

There are some rare and strict exceptions to Limited Tort that would enable you to collect money for pain and suffering under limited circumstances.   Our firm has assisted injured people with Limited Tort to take advantage of these exceptions.  However, we have too often had the unfortunate experience of telling injured people they cannot receive compensation because they chose Limited Tort.  We recommend that you select Full Tort.

Saving on Car Insurance with Full Tort Protection

There are ways to save on your auto insurance premiums without sacrificing your legal rights and your family’s safety:

Choosing a higher deductible. The deductible is the amount you pay before your insurance benefits kick-in. Raising your deductible to a higher amount can reduce the overall cost of your insurance. If you have a safe driving record, choosing a higher deductible may be appropriate for you.  Just be sure to choose an amount you still can comfortably pay.  Save the difference in deductible amounts on a monthly basis.  Think of it as paying yourself instead of the insurance company.  If you don’t use the coverage, you can use the money you saved for something else.

Shop for a new insurer. Insurance is a competitive business, and another company might give you the same coverage you have now for as much as 25 to 30 percent less. Combine insurance coverage. Insurance companies offer a discount if you have more than one policy with them. For example, you could bundle your homeowner’s and auto policies all with the same insurer. You also can insure more than one car with the same company to get a discount on your rates.

Seek out discounts. Insurance companies give a variety of discounts for things such as having a clean driving record, staying with the same insurance company and having certain safety features on your car, like anti-lock brakes, anti-theft features and daytime running lamps. Discounts may be given for belonging to certain organizations like AAA, professional associations, academic groups and others.  Companies have also been known to give discounts to students who get good grades; persons having low-risk occupations and those who took a defensive driving course. Insurers do not always advertise these discounts, so be sure to ask your agent.

Pay your bills on time. Auto insurers in most states factor your credit score into their rate formulas because of a correlation between credit history and claims. Avoid an insurance rate hike by maintaining a good credit rating. Periodically check your credit reports for errors that could hurt your score.

Drop collision coverage. If you have an older car worth less than 10 times your annual collision and comprehensive premiums, your payments are more than you’d probably recover in a claim after your deductible. In that case, your vehicle will be declared a total loss if the cost to repair it surpasses its declining book value. So while the car might be repairable, you won’t collect enough to cover the cost.

Delay your child’s driver’s license. This one may cost you a Parent of the Year award, but you can postpone a large premium increase for a year or two until the economy and perhaps your finances improve. Your auto insurance rates can rise 100 percent or more when your child reaches the age to qualify for a license.  If that time has arrived for you, consider having your teenager wait until age 18 or 19 to get a license, don’t let him drive until then (of course), and inform your insurer of those facts.

If you have any questions about automobile insurance or a recent car accident, please contact the personal injury lawyers at PA Prepaid Legal for a free no obligation consultation at 1-800-375-3089.

Thousands of people across the country have fallen behind on their mortgages and have little hope of catching up with the payments. If you are one of these people, there may be help. The Federal Government has recently implemented the “Making Home Affordable Program” to help citizens stay in their homes during these hard times. This program gives incentives to many of the nation’s larges lenders in exchange for their participation in refinancing and loan modification programs. According to the United States Department of Treasury, homeowners will likely have the best success working directly with their lenders to work out an amicable agreement. There are also legitimate companies and agencies that are willing to help homeowners for little or no fee, including the Department of Housing and Urban Development and your prepaid provider firm.

Although help does exist, there are many individuals and groups that are scamming desperate homeowners during this very difficult time. If you are falling behind on your mortgage, others may be able to easily find out through legal means. Mortgage lenders publish notices prior to foreclosure sales and private firms often compile lists of homes and homeowners awaiting foreclosure. If you get caught in a scam you may end up losing money, your home, or both. The federal government has outlined the top 10 warning signs for foreclosure or loan modification plan fraud to make homeowners more conscientious of fraud.

The top ten warning signs of mortgage modification/foreclosure scams are:

1)      “Pay us $1,000 and we’ll save your home.” Although legitimate companies and organizations may charge a small fee for their services, fees of thousands of dollars is a warning sign of fraud, especially if they want a large payment if full upfront. Beware of sending anyone wire transfers or cashier’s checks before they have performed any services on your behalf.

2)      “I guarantee I will save your home-trust me.” Unrealistic promises are should be a red flag to a homeowner. Remember, very few things are guaranteed and if it sounds too good to be true, then it likely is.

3)      “Sign over your home, and we’ll let you stay in it.” Be very careful of transferring title to your home to anyone. An incorrect transfer could result in you losing your home and remaining legally responsible for your mortgage.

4)      “Stop paying your mortgage.” Stopping payment on your mortgage will likely just make things worse.

5)      “If your lender calls, don’t talk to them.” Actually, working directly with your lender may be your best option. Lenders may consent to a variety of remedies, including lower monthly payment, a loan modification, a short sale, or a deed in lieu of foreclosure.

6)      “Your lender never had the legal authority to make the loan.” Be cautious of anyone other than a lawyer discussing the law. There are no secret or hidden laws that will eliminate your debt or let you stay in your home without paying your mortgage.

7)      “Just sign this now; we’ll fill in the blanks later.” Never let anyone other than a trusted professional fill out paperwork on your behalf.

8)      “Call 1-800-Fed-Loan.” Scams will lead you to believe that you are dealing with a government agency, when in reality you are not. Remember, government agencies and legitimate business will not require large fees upfront.

9)      “File for bankruptcy and keep your home.” Filing for bankruptcy will not automatically let you keep your home. Bankruptcy is a complex legal proceeding that should be handled by a bankruptcy attorney.

10)  “Why haven’t you replied to our offer? Do you want to live on the streets?” Those who use high-pressure tactics to get you to pay them money to handle your foreclosure problems are likely involved in fraud. Legitimate housing counselors do not use these tactics to contact business.

If you believe that you are the victim of fraud or want advice on mortgage foreclosure, loan modification, bankruptcy, or any creditor issue feel free to contact your prepaid legal provider firm.

If you have any questions relating to job loss, and the financial issues that often occur, please contact us at 1-800-375-3089 for a free consultation.

Federal Assistance for Health Insurance Costs
The subsidy created by the American Recovery and Reinvestment Act of 2009 (ARRA) to help jobless workers afford their health insurance premiums was recently extended by Congress.  The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA“) requires many employers to offer the option to have continued group health coverage after an employee is terminated or when other qualifying events occur.  Under the ARRA, the federal government provides a temporary 65% subsidy (premium reduction) of premium payments that eligible workers would need to pay to continue group health insurance.  To qualify for the subsidy, workers must have been involuntarily terminated on or after September 1, 2008.  The Act also gives workers who did not elect to continue health insurance coverage under COBRA extra time to make that election and receive the subsidy.

ARRA COBRA Benefits Extended
The new ARRA legislation extends the period during which involuntary terminations would trigger subsidy eligibility.  Workers involuntarily terminated between September 1, 2008 and February 28, 2010 are now eligible for the subsidy.  The maximum subsidy period was also expanded from 9 months to 15 months, including workers currently receiving subsidized COBRA coverage.

Are You Eligible for the COBRA Subsidy?
If your employment was terminated within the last 120 days, you may still be able to elect COBRA coverage and be eligible for the ARRA subsidy.  If you were eligible for the subsidy and exhausted the original 9-month subsidy but continued to pay the full premium, you may be eligible for a refund or credit for continuing coverage.

Coping with Job Loss
Losing your job is never easy.  It can spark a host of financial issues involving debt collection, unpaid child support, mortgage delinquency and even bankruptcy.  There are things you can do proactively to make is less painful.  Collect all compensation due from your job.  Apply for unemployment compensation.  If your cash reserves are short, deal with your financial issues proactively and don’t ignore them.  With the right attitude, you can use this opportunity to take a step back and consider new directions that may well prove to be more rewarding both personally and financially.

Questions Relating to Job Loss

If you have any questions relating to job loss, and the financial issues that often occur, please contact us at 1-800-375-3089 for a free consultation.

Your Pre-Paid Legal Services membership is a valuable tool. We encourage you to use your membership and get the most out of it. Please remember that your membership provides you with a standard Will for no additional charge. A Will might be the most important document you’ll sign in your lifetime. Please call today to have it prepared.

Disclaimer: The information contained in this message is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the issues related to issues involving job loss and employment. Every individual’s factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state.

Debt settlement companies claim to help consumers pay settle debts by paying less than what is owed. They typically instruct consumers to pay into a special account until they save enough to make a settlement offer to creditors. But first, settlement companies grab significant fees from the account, and keep the fees even if they never settle the consumers’ debts. The fees are usually very high, ranging from 14 to 18 percent of the total debt, payable within the first half of the contract. For debts totaling $20,000 to $30,000, the fees would be from $2,800 to as much as $5,400.

To make matters worse, as consumers wait for their debt settlements, interest and late fees pile up on their accounts, their bills may be turned over to collection agencies, their credit reports are damaged, and they may even be sued for nonpayment. “The promises that debt settlement companies make are not born out by the facts,” said Gail Hillebrand, Financial Services Campaign Manager at Consumers Union. A recent Government Accounting Office (“GAO”) study found the debt settlement companies’ claims of success to be “suspiciously high” and “significantly higher than is suggested by evidence obtained by federal and state agencies.” According to the GAO study, governmental investigations have typically found that less than 10 percent of consumers successfully complete these programs.

Before signing an agreement to use a debt settlement firm, we recommend that you consult with your Pre-Paid Legal Services provider law firm and have any such agreement reviewed by an PA bankruptcy attorney.