Collecting a Lump Sum Followed by a Payment Plan: A Case Study | FCI
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Collecting a Lump Sum Followed by a Payment Plan: A Case Study
Collecting a Lump Sum Followed by a Payment Plan: A Case Study

It is our job as debt collectors to get our clients paid as much as possible as quickly as possible.  Often clients are willing to offer a discount on the amount due if debtors agree to pay a lump sum right away.  Debtors know this and can try to take advantage by offering a lump sum payment that is less than what they can actually afford.  Thus it is important for debt collectors to have the skills to get a clear picture of a debtor’s situation.  In addition, sometimes debtors have the funds to make a large initial payment and then pay a remaining balance over time.  Collecting a lump sum followed by a payment plan is preferable to creditors than a payment plan of equal smaller payments as they will receive more money more quickly.  This case study describes such a case.

The creditor, in this case, is a large financial institution.  The debtor is a dance teacher.  The total amount owed was about $20,000.  Of this, about $15,000 was unpaid principal and $5,000 was unpaid fees.  The case was referred to our outside collection law firm after no payments were made for about 4 months. 

The debtor responded to our first email, explaining some of his situation and expressing a willingness to work with us to resolve this debt.  He stated that he became unable to pay the weekly amounts to the creditor because: 1) he went through a divorce, 2) he lost his business due to the divorce, and 3) he was physically injured and unable to work.  He said he knew the debt belonged to him and he thought he would be getting back to work soon and, thus, be able to make payments again.  He then asked about his options.

We sent him an email outlining the two options: a payment plan over time or a discounted lump sum payment.  He was interested in the lump sum option but did not initially have the funds to make that happen.  However, he asked if he could start by paying $500 per month, beginning that month, while working on getting a loan. The creditor approved this plan, and the debtor made his initial payment.

Then, toward the end of that same month, the debtor emailed with an offer to settle the matter for $10,000.  Our client approved a counteroffer of $15,000, the amount of the unpaid principal.  The debtor responded that he could pay the $10,000 that month and then pay the remaining $5,000 over 12 months.  The creditor approved this plan, and the matter was settled in accordance with the plan.

Collection Tip

The main takeaway from this case study is that collecting a lump sum followed by a payment plan is, at times, the best way to collect the most money most quickly.  In setting up this type of repayment plan, it is important to get an accurate picture of a debtor’s financial capacity through candid communication.  Once the debtor’s financial situation is determined, this repayment plan involves collecting the highest possible amount right away and then collecting the remaining agreed-upon balance over a set amount of time that will work for both the debtor and the creditor.

 Who is The Collection Law Group (TCLG)?

The Collection Law Group ("TCLG") is a collection of attorneys who specialize in commercial debt collection on a contingency basis. TCLG is more effective than traditional collection agencies because they utilize an “attorney-driven approach” to resolve past due accounts receivable. TCLG clients say their “attorney-driven approach” yields faster and higher recovery amounts than other methods. To ensure your past due accounts are being collected as quickly and efficiently as possible, email Brad R. Magill at TCLG ( and set up your no-risk account consultation. The major benefits to your organization of working with TCLG are:

  • Increased recovery amounts.
  • Decreased time periods to recover outstanding amounts. 
  • Increased file management efficiency.
  • Increased time management efficiency.
  • Improved communication.

TCLG has provided the above benefits to numerous clients in various industries for many years.
>> Learn more about The Collection Law Group 

This Case Study was taken from The Collection Intelligencer, The Collection Law Group's Monthly Newsletter, Issue 1029 - January 2024. 

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