$20,000 Bad Debt #1

We did everything right in this assignment, but still had problems collecting. We were hired by a well-known friend, which is usually positive. We had a written agreement—another positive. We performed our services extraordinarily well, a third positive.
Then it came time to collect. We had received an initial deposit and some progress payments, but it was impossible to collect the remaining $26,000 balance. For one thing, the friend who hired us had left the company. For another, our client company was having cash flow problems.
I tried soft approaches and pleasant phone calls to no avail. My collection efforts became increasingly hostile, and toward the end, downright insane. The deadbeat CEO was a prominent leader in a Denver minority chamber of commerce. When all collection attempts were failing, I threatened to make the problem known to the chamber board of directors. As you can imagine, he went ballistic—but still didn’t pay.
Our client had a contract with the Bureau of Land Management (BLM), and we provided services to the BLM as his subcontractor. When he didn’t pay, I threatened to contact the BLM directly. I tried every tactic I could dream up—still no money.
When the debtor's attorney contacted me to cease and desist, I even worked with her to try to reach a settlement. Finally, I dropped the matter entirely, because I was becoming the kind of hit-man I don’t want to be. I put the case files in storage and they sat there for months, until my office manager suggested hiring a professional commercial collection agency. She said she had found one, and we gave it a try. The collector was willing to sue my client, and would foot the bill for the lawsuit. I thought we had nothing to lose, so went ahead.
The collector recovered the entire debt in monthly installments, and we paid him 50%, roughly $10,000. We put $10,000 into our bank account, and considered ourselves lucky.

January 9, 20—

Mickey O'Malley, Contracting Officer
Bureau of Land Management (BLM)
Procurement Branch
14008 West Colfax Avenue
Lakewood, Colorado 80125

Dear Mickey,

This is a follow-up to our phone call today.

Our firm delivered outplacement services to the Bureau of Land Management under a contract with Lincoln Management. Our agreement with them is attached. The service was delivered successfully, with excellent written evaluations by the participants.
I believe outplacement was specifically spelled out in the contract and paid for by the taxpayers. We cannot get Lincoln Management to pay us for our work.

As of December 29th, they owed us a balance of $22,022.01. Greater than $19,000 is more than 90-days past due. We began collection by sending monthly statements, then friendly telephone reminders, all to no avail. They will not return phone calls, e-mail messages, or any requests for payment. It's obvious they do not plan to pay us. That's why I'm coming to you for assistance.

Please review this case and then let me know how you'd like to proceed.

With best wishes,

William S. Frank

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