Credit Matters

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How to Separate Fact From Fiction

Dean Kaplan07 November 2013


By Dean Kaplan

Unfortunately, we know that many debtors will provide false or misleading information in order to make it harder to collect. A well designed and executed strategy is necessary to get to the truth which is key for increasing collections and making good business decisions as discussed in this recent article   You will also find a copy of this article in a blog on Credit Matters website at

As all parents know, most children are naturally adept at denying responsibility or providing a convincing explanation for a situation. Apparently we learn this at an early age and some people do not hesitate to practice this approach throughout their life. As a parent, we ask questions to look for inconsistencies in the story. We may use misdirection and if necessary we gather information from independent sources. If every piece of the puzzle fits, we accept the story.

But, if we find an inconsistency, we work that hole until it opens wide with a gusher of new explanations. From there we piece it together to find the truth. The same strategy works in commercial debt collection.

We've all heard the excuses and explanations in a thousand times:

  • We'll pay you when we get paid
  • We have a big customer who hasn't paid us
  • Sue us and we will file bankruptcy
  • The IRS is taking all our money
  • Our checking account is overdrawn
  • We are having cash flow problems
  • I haven't paid myself in over 6 months
  • I've put everything I own into the business and we are still barely hanging on
  • I should be able to pay you in 30 days
  • My family member has a health issue
  • The dog knocked over the computer and we lost all our records
  • My bookkeeper embezzled
  • We got robbed

The key to finding out if any of this is true is to keep asking questions and get more details. If you understand the nature of their business, ask questions along those lines. The more they say, the more chance there is for an inconsistency. We frequently follow the old adage 'give them enough rope to hang themselves' and see what happens. Then we ask them to provide independent corroborating evidence, for instance a screen shot of their bank account showing it is overdrawn. Other evidence sought might be a notice from the IRS about taxes owed, or a hospital bill or admission form, or a police report or newspaper story, or a copy of their financial statements. If they won't corroborate with this information, they clearly won't cooperate in paying their debts.

Another effective method is to ask question about a topic where you have previously independently gathered information. Press releases, newspaper stories, social media announcements, lien, judgment and UCC filings are good sources. When they don't know what you already know, a story teller is more likely to make a mistake and an honest person will tell you what you already know.

Once you know whether you are dealing with an honest or deceitful person you can develop a strategy on how to proceed. Next time we'll discuss what to do when you catch someone in a lie.

Dean Kaplan

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