Private school debt collection is when school fees fall into arrears with school fees.
This is generally due to a sudden change in the financial situation of the household, whether it be one of the parents has lost their job, health problems or medical expenses, divorce or separation, the decline of a business or even the loss of a family member.
With the impact of Covid 19 and the cost of living increasing of late, whether it be fuel at the bouser, essential food and groceries, electricity, insurances and of course the hike in interest rates, it is no wonder many are feeling considerable financial pressure at the moment.
Unfortunately, given the rising transportation costs, shortages on many items and unseasonal weather, prices are increasing and do not look to be falling any time soon.
Unfortunately, this also contributes to parents falling behind on their children’s school and tuition fees.
Schools do however show empathy and compassion in these situations and always try and offer payment arrangements or extensions where possible.
Private School Debt Collection
Staying on top of cash flow and arrears is paramount, therefore being proactive when school fees fall behind is extremely important.
Rather than letting things get out of hand or further into the red, its important to make contact with the parents in order to understand the reason for the default and ascertain whether this is something that can be managed moving forward.
In many situations, parents may just require a little extra time to pay so keeping communication lines open if key.
Whilst many would like to send their children to private schools to obtain their education, it can be extremely costly, so it is important that you understand the cost of each term and any additional fees before you enroll your child to avoid falling behind.
Why do Schools need Debt Collection
Having worked with many private schools in the past, a common reason for tuition fees falling behind was due to the separation of the child’s parents, one parent wanted their child to attend a private school, whilst the other did not or could not afford too, therefore this is something that needs to be addressed in a timely manner.
When a parent enrols their child, you are required to sign an Enrolment Agreement which details the terms of your child’s enrolment, payment of fees and so on.
The terms of the contract should be clear and in the event of nonpayment, the terms should allow for penalty interest to be claimed on arrears, termination of enrolment, no refund clauses where children are withdrawn from the school and recovery of additional costs where necessary to recoup unpaid school and tuition fees.
It is important to ensure that both parents sign and date the Enrolment Agreement so that they are both liable for payment of the fees. In some circumstances however, there may be orders in place made by the court only holding one parent responsible for payment of the fees.
Why Use a Debt Collection Company?
Where attempts to recover unpaid and overdue fees have been unsuccessful, establishing a relationship with a debt collection agency is essential so you can move to recover the debt quickly.
Unfortunately, the longer you delay recovery, the less likely you are to recover the debt, particularly if the parents’ financial situation is declining.
When commencing the debt recovery process, it is important you have the right people in place to get a positive result whilst understanding the school’s values and protecting their reputation.
We can get the ball rolling by sending a letter of demand, putting the debtor on notice of the consequences of non-payment. The debtor is given a deadline in which to pay the arrears in full or enter into a suitable payment arrangement.
Failing this, a further letter can be sent, contact can be made, or legal proceedings may commence. How you wish to approach the matter is completely up to you.
No Collection No Commission
Our costs are based on a fixed commission rate however if you have a ledger of debt to collect, we are negotiable on the commission rate.
In a nutshell, if we recover the debt, we claim commission on the debt amount, however if we are unsuccessful in recovery, you do not have to pay a cent. What have you got to lose?
By way of private school debt collection services, we offer letters of demand, phone calls, payment negotiations, account settlement arrangements, working through disputes and account status reports.
If the debt can be recovered without a need to proceed with legal action, this is a much better outcome for both the debtor and the school whilst preserving the relationship between them.
If recovery is unsuccessful and legal action is necessary, the matter can be referred directly to Stonegate Legal whom we work closely with.
A Statement of Claim can be filed and served upon the debtor. From the date of service, the debtor is given 28 days to pay the account in full, enter into a suitable repayment arrangement or lodge a defence if they are disputing the matter.
Should the debtor fail to take any action, an Application for Default Judgment can be lodged and entered.
Once Default Judgment has been entered, the debtors credit file is affected. A Default Judgment can remain on your credit file for 5 years and it can strongly affect your ability in obtaining a loan.
If you are able to obtain a loan, the chances are the interest rate you are charged will be much higher. In addition to this, enforcement action can proceed.
We appreciate that private schools need to stay on top of recoveries, whilst maintaining relationships with the parents of their students and sustaining a positive reputation amongst the community. We are strong believers that having the right people on your team who understand your values, along with years of experience and knowledge in this field will get you results. Give us a call today and let us help you.