HOW TO COLLECT DEBTS

Pay as you go, or a strictly cash business, is the best and safest method of doing business. But certain conditions or customs in trade make this sometimes impractical or impossible, and credit must be given. Under this method dishonest, careless or unfortunate people contract debts, then refuse, neglect or are unable to pay them, and collections, peaceable or forced, become a necessity.

The requisite steps to collect such debts are a matter of great importance and should be understood by everybody, but they are not, and much unpleasantness and heavy losses are often the result.

Methods by Which Debts are Contracted

Goods are bought on credit, to be paid for at a definite or indefinite future time. Labor is employed, to be paid for at certain future periods. Lands, houses and other property are purchased under contract of future payment. Money is borrowed, under notes, mortgages or other securities, and many other transactions in business and trade call forth occasions or present temptations to contract debts.

Suggestions for Avoiding Debts

1. Do a Strictly Cash Business.-Better small profits and quick sales, than large profits and long credits.

Mark your goods as low as possible and adhere unswervingly to your cash principle. This is best for buyer and seller. It avoids collections and prevents losses. It saves the time and labor of keeping accounts. This enables the seller to sell cheaper and the buyer to buy for less than on credit.

2. Cautions.-Goods sent abroad should be paid for before the purchaser takes possession.

The time of credit should be as short as possible and the bills collected when due. When working for others collect your wages weekly or monthly, in accordance with the agreement to pay, unless your employer is quite responsible, thus making your dues safe.

In renting lands or houses, a duplicate lease should be made, one for each party, the rent paid promptly when due, at the house or business place of the landlord, and the payment credited on the back of the lease.

In receiving or making payments, a receipt should always be made out; it is a voucher and may save trouble.

Hotel and boarding-house keepers cannot be too prompt and strict in collecting their dues, as their customers are mostly transient, making forced collections sometimes impossible.

Never loan money without requiring a note or a duebill, if the amount is small; this is safest even between the most trusted friends.

When the loan is large, have the note secured by a mortgage on real estate; but see to it that the same is not encumbered by previous claims, which would render your security worthless. It is safest to require an abstract of title and then have your mortgage recorded immediately.

This precaution should also be observed where a chattel mortgage is taken on personal property.

If a small amount of money has been loaned without security, and it can apparently not be collected without legal process, it may be best to drop the matter and consider the loss as so much paid for a lesson in business prudence.

First Steps in Making Collections

The debtor

These depend very much upon circumstances. may have met with reverses or a misfortune, rendering him unable to pay at the time specified, and deserving of patience; others may be careless and need a sharp reminder; a third party, inclined to be dishonest, may need close watching. Thus discretion is necessary as to the form and tone of the letters requesting payment. For letter forms illustrating the first efforts in making collections, see pages 65 and 66.

LEGAL STEPS IN COLLECTIONS

No other motive except the question "Will it pay?" should induce a creditor to legally enforce payment. A mere feeling of retaliation or of getting satisfaction has no place in business.

Before resorting to the power of law it is well to ask the following questions:

1. Have all reasonable and peaceable efforts been made to induce the debtor to make payment?

2. Is the amount sufficient to warrant the expense involved in the legal process?

3. Has the debtor more property than the law allows him by way of exemption?

4. What does the law exempt? (See Exemption Table.)

When all peaceable means have been exhausted and the debt is not paid, it then becomes necessary to collect it, if possible, by legal process.

If satisfied that the debt can be collected, then the account should be placed in the hands of a justice of the peace, unless it is larger than comes within his jurisdiction.

This amount varies in different States, as shown by the following table:

Limit of Jurisdiction with Justice of the Peaco

The following shows the largest amount in the different States and territories which the justice of the peace, through his official position, can have jurisdiction over:

When the amount comes within the jurisdiction of the justice he issues a summons, which the constable presents to the debtor, reading it to him if he can be found, which is called "serving the summons."

Form of Summons

The wording of this summons will be somewhat as follows;

STATE OF

88. County,

The People of the State of

GREETING:

to any Constable of Said County

You are hereby commanded to summon L. M. to appear before me at on the

day of

at

o'clock

M., to answer the

complaint of R. L. for a failure to pay him a certain demand not exceeding and hereof make due return, as the law directs.

-,

hand this

day of —, 19-.

Given under my

JAMES WATTS, Justice of the Peace.

In case the party is absent or refuses to hear the summons the constable may read it to some member of the family of ten years or upward and leave a copy of the same. A summons is usually served at least three days before the trial is to take place. Upon

the serving of the summons the debtor may pay to the constable the demand of the debt and costs, taking his receipt for the same, which will satisfy the debt and prevent all further costs.

The Judgment

If at the time set for trial both parties appear and are ready for the same, the justice proceeds with it and determines the matter in controversy. His determination is called the judg ment. The judgment can be rendered if the defendant does not appear at the trial.

Demanding a Jury

Either party in a trial before a justice of the peace may demand a jury, and the justice is bound to grant the demand upon the deposit with him of the jury fees by the party making the demand. The jury may consist of either six or twelve men.

The Execution

The judgment being obtained, the plaintiff may now enforce payment. This process is called execution. It consists in a writ commanding the constable to seize sufficient of the property of the defendant, "which is not exempted by law," to satisfy the claim and costs and to sell the same and bring the money into the court to be paid to the plaintiff. The constable then proceeds to do this and if he succeeds in finding such property seizes it, sells it at auction, and, brings the money into court.

Attachment.

While the causes for which an attachment writ will issue vary somewhat, in the different states, the following grounds are almost universal:

Where the debtor is a non-resident or a foreign corporation; where the debtor is about to remove from the state; where the debtor conceals himself so that process cannot be served upon him; where the debtor has removed or is about to remove his effects from the state to the injury of creditors; where the debtor has fraudulently conveyed, concealed or disposed of his property so as to hinder and delay creditors, or is about to do so; where the debt was fraudulently contracted and the statement constituting the fraud reduced to writing.

The creditor must file with the clerk of the court an affidavit, stating the nature and amount of his indebtedness and any one