Some of my most uncomfortable moments have come when talking to landlords about considering settlement offers.
Often, the landlord is so emotional about the debt he or she is owed that settling is not an option.After 12 years of reviewing tenant debt accounts, I can tell you with certainty that landlords who seriously consider settlement offers recover much more money than landlords who dont.
If a previous tenant makes a settlement offer, he or she is looking to resolve the debt for some reason right now. Maybe he is trying to rent another place to live, or trying to obtain a mortgage or another loan. For whatever reason, he is motivated to pay you. If you ignore the offer, he may find another way to rent or get a mortgage or loan without paying you.
This may be your only opportunity to collect even part of what you are owed.Always respond to the offer in some way, even if the previous tenant has made an offer that seems unreasonably low. Ignoring the offer, or outright refusing the offer, ends the negotiations and gets you nowhere. When you receive a low-ball offer, always make a counter offer.
I suggest starting at countering with an offer of 70-80% of the balance.In fact, I would take this advice one step further.
If a collection agency was working to collect my debt, I would give the agency blanket authority to negotiate and accept settlements of 70% on the spot without my approval. The collector has a motivated debtor on the phone and the debtor wishes to settle the debt. Dont give the debtor an opportunity to change his mind. If the collector must first contact you to authorize the settlement, wait to hear back from you, then contact the debtor again with your answer, you may have lost an opportunity to collect your money.Make sure that any money you are paid clears and is in your pocket before you give the debtor a clearance letter. Occasionally a debtors goal is only to obtain the clearance letter. Once he has the letter, he could stop payment on the check or dispute the credit card charge, depending on the payment method. Your collection agency will know how to make sure the funds have cleared before they supply a letter. If you are collecting the debt yourself, I recommend you require a certified check.
I once had a conversation with an attorney about a possible civil suit against someone who had no assets. My position was that regardless of the lack of assets, I wanted to sue based on principle. The attorney replied that principle is expensive. Try making a bank deposit of principle, he said.
He was right. In principle, you are entitled to be paid the entire amount the previous tenant owes. It is your right to demand full payment. So, you may stand on principle and refuse settlement offers. On the other hand, if you seriously consider settlements, you will collect much more of the debts you are owed.