Steve Harms

Tuesday, February 26, 2013

Collection Seminar: Thursday June 6, 2013

will be recorded and available by CD

We are pleased to announce a full day of discussion on collecting money from your delinquent accounts.

This seminar is geared for attorneys and is based upon written materials submitted by the speakers and my book, Handling the Collection Case in Michigan.

The seminar, organized by the Michigan Institute for Continuing Legal Education, is a detailed look at many of the key collection topics, as per the day's agenda, printed below, and will be held at the beautiful INN AT ST. JOHN'S in Plymouth, MI on Thursday, June 6, 2013 (and available on CD thereafter).

Topics for the day:

Creditors’ Rights 2013
(subject to any changes in topics or speakers)

Thursday, June 6, 2013

The Inn at St. John’s, Plymouth

Course Schedule


Steven A. Harms

Muller Muller Richmond Harms & Myers PC


Morning Session:

9:00 a.m. to 12:00 p.m.

The collection case from beginning to end, a complete discussion on the topics involved from negotiation before suit, right up through post judgment collection.

Steven A. Harms and other speakers
Afternoon Session:

1:30 p.m. – 5:30 p.m.

1:30 p.m. – 2:00 p.m. How to Use a Garnishment Effectively

• Practical tips for using garnishments effectively

• The new 180-day rule

• Using garnishment in insurance claims (e.g. fire)

• Thinking beyond banks and wages- garnishing accounts receivable, lottery winnings, state of Michigan income tax refunds, insurance proceeds, rent income (rent payments), and more

• Exceptions to garnishments: pension plans, child support, 401k, IRAs, etc.

• Priority writs that affect your garnishment

Daniel E. Best

Weltman Weinberg & Reis Co LPA


2:00 p.m. – 3:00 p.m. The Nuts and Bolts of Asset Seizures (Execution Writs)

• Process overview- how to get an order to seize property

• Elements of an execution writ (and what forms to use)

• Teamwork: court officer and attorney collaboration in asset seizures

• The attorney’s role in information gathering for effective asset seizures

• Court officer fees

Steven A. Harms

Muller Muller Richmond Harms & Myers PC


Jeff Kirkpatrick

Court Services Agency


3:00 p.m. – 3:15 p.m. Questions and Answers

3:15 p.m. – 3:30 p.m. Networking Break

3:30 p.m. – 4:15 p.m. Tips, Tricks, Traps and Trouble: Collecting Money and Avoiding Consumer Claims

• Caselaw update: Fair Debt Collection Practices Act, Michigan Collection Practices Act, Fair Credit Reporting, and more

• Latest filing trends and fact patterns

• Best practices for collection law firms

Charity A. Olson

Olson Law Group

Ann Arbor

4:15 p.m. – 4:45 p.m. A Court’s Perspective on Attorney Fees and Costs

• New cases on attorney fees and costs

• Attorney fees as part of contract

• What "reasonable attorney fees" means

• Is a contingency fee a "reasonable attorney fee"?

• Chargeable costs

Hon. Dennis C. Drury

52nd District Court


4:45 p.m. – 5:15 p.m. Skip Tracing: Uncovering Debtors and Hidden Assets

 Using subpoenas, credit reports, Internet resources, and public records together to locate assets

 Skip tracing practice tips and advice

 A practical approach to working with debtors

 Commercial versus consumer skip tracing; constraints of FDCPA

 Real property skip tracing

 Skip tracing check sheet and its importance when conducting a creditor’s examination

5:15 p.m. – 5:30 p.m. Questions and Answers


Friday, February 22, 2013

Being a witness at a collection trial: Common concerns

Rarely do collection cases go to trial.  That's a good thing because providing a witness, or being a witness is an inconvenience at best, and a real strain at worst (where the case is heavily disputed).  This discussion covers some of the common questions asked by  people who may have to testify at a collection trial.

How do I prepare to be a witness in a collection trial? Preparation of a witness doesn’t have to be complicated. Let your witness know the facts and your theory of the case, and what you hope to prove in court. You should also walk the witness through what happens in court — that she or he be called to the witness stand, sworn in, questioned by your lawyer, then cross-examined by the other side.

Sometimes there will be redirect, asking some follow-up questions based on the cross-examination, and then the other side will re-cross. Then, in all likelihood, the witness will be excused with the instruction not to talk to other witnesses about the case before the litigation concludes.

The witness should always speak freely, based on her own knowledge of the facts and circumstances, without a great deal of influence from anyone else. You should never give your witness a prepared speech or words to say. Most lawyers know funny stories about witnesses who were caught reciting memorized statements in court, or reading speeches they concealed in their clothing. But those stories aren’t funny at all to the party who lost the case when it became clear to the jury that the witness was reading or reciting somebody else’s words. It’s even OK if they have to answer: “I don’t know” to some questions...that’s normal.

REMEMBER: Witnesses must be able to testify from their own recollection of what happened. That’s true even if the witness isn’t going to say exactly what you want to hear.

What if no one at our company has any personal knowledge of the collection issue? When no one has personal knowledge, do the best you can to create a solid paper trail: a clear set of records and documents for your witness, so it appears that your company keeps clear and accurate records of transactions and events. With good preparation, a disorganized company can come across as highly organized. With poor preparation, even a scrupulous company can look like it doesn’t even know how to use a paper clip.

Sometimes you have to concede certain factual claims or issues because you don’t have a witness to testify in response to the defendant’s claims. If you discover that you have to concede is-sues that are very important to your case, it’s time to negotiate and to settle your case for the best amount you can get. The facts and circumstances are what they are, and it’s not always easy to make lemons into lemonade.

Do we always have to physically appear at the trial? Sometimes when a witness can’t be physically present for trial, you can make arrangements to take testimony in advance, or to have him testify electronically. Under exceptional circumstances, it may be possible for a witness to testify at a hearing by remote communication such as by telephone or through videoconferencing.

Courts favor testimony that’s given live, in court. Other methods of presenting testimony are the exceptions to the standard rules, and may be available under only limited circumstances. Start with the expectation that the judge will insist that the witness appear in person. Don’t anticipate that you can present testimony by any other means unless you first confirm it with the court

Can my deposition be used? Sometimes a deposition or other form of sworn testimony can be preserved so that a witness doesn’t have to be physically in the courtroom or dispute resolution hearing to be heard. Generally speaking, you must make arrangements beforehand, based on the unavailability of the witness for a hearing, and give all parties the opportunity to participate in the examination and cross-examination of the witness.

Wednesday, February 20, 2013

A personal comment.... (with apologies to readers who expect substance, not fluff, so, after this, I'm back to substance)

Today I break my cardinal rule of making this blog all about the facts and not  going on and on about personal stuff.  I was overwhelmed with an award I received in Miami last month at the International Association of Commercial Collectors (IACC), and here is the write up in Scope, the official newsletter of IACC (Feb 2013, copyright held by IACC).

The IACC Leadership and Distinguished Service Award recognizes an IACC member individual who has given his or her time and energy to better the IACC and who has conducted his or her professional and personal life for the betterment of the commercial collection industry. This year we recognize and honor an individual who exemplifies these qualities. Since becoming a member in 1988, Steve Harms, has been very active from the start.

Over the past 25 years Harms has been instrumental in shaping, developing and perfecting the IACC’s training and educational programs. He has conducted numerous face-to-face seminars, presented many sessions at annual meetings and has taught well over a dozen teleseminars; and that is only for IACC. Harms also shares his knowledge by teaching as an adjunct professor at a top business college in Michigan and speaking for many associations across the country. And, if that’s not enough, he has also authored or co-authored (or contributing author) no less than eight books on credit/collections/business.

Beyond his dedication to improving IACC’s educational offerings, Harms has also given his time by serving on the board of directors of IACC for three terms, he has served on many committees over the years and continues to serve today.

Thursday, February 7, 2013

Using the appropriate legal theories

After you figure out who you’re going to sue, you need to spend a bit of time thinking about your causes of action — the legal theories you’re going to present in your complaint for why the debtor owes you money.

Contract theories

The most common legal theories are based on principles of contract. Possible causes of action include:

* Breach of contract: That is, you had a contract with the defendant, you fulfilled your side, she didn’t fulfill her obligations, and she owes you money.

* Complaint on an account stated: In many states, you can file a special cause of action based on your final statement of account. You support your complaint with a copy of the statement of account and an affidavit attesting that the statement of account is accurate. This shifts the burden of proof to the defendant, and if the defendant doesn’t file a proper response disputing the debt, the court will issue a judgment in your favor.


In simple terms, a claim of fraud alleges that the debtor made a false claim or representation to you, knowing that their claim was false and that you were acting in reliance upon that statement, and that as a result of your reliance you suffered an injury. Fraud involves more than a claim that the debtor said he was going to pay you but didn’t.

For example, fraud may be alleged where a customer presents you with false bank statements, or a fraudulent letter of credit, making you believe that the customer is financially strong when in fact he has no resources and no intention of paying you, and he gets you to ship goods to him based on his false representations.

Suing owners of corporations

Normally, the owners of an incorporated business are shielded from personal liability for corporate debts. However, corporate officers may be held personally liable to pay you under a number of different theories( but never on a contingency fee, well, almost never), including:

* Undercapitalization: Not enough money was invested at the start to adequately finance the business, or the principals withdrew too much money from the business, resulting in its financial problems.

* Commingling personal and corporate assets: No clear line exists between the personal assets of the owner and the assets of the business. For example, funds belonging to the business may be instead used for personal purposes, such as paying the college tuition of the owner’s children. Or the owner of a small corporation treats the corporate bank account as if it’s his private checking account, keeping his own money in the account and using it to pay household bills.

* Piercing the corporate veil: Seeking to hold corporate officers personally liable as the result of extraordinary misconduct on the part of the officers. For example, you may allege:

* The corporate entity is a mere instrumentality of another entity or individual. The corporation isn’t treated as a separate entity, following the required protocols (holding board meetings, keeping corporate records, and so on), but is instead an alter ego for its principals, who want to avoid personal responsibility for their questionable conduct.

* The corporate entity was used to commit a fraud or a wrong. The primary purpose for the corporation’s creation was to further a wrongful act.

* The corporate entity created an unjust loss or injury to your company. Courts have had difficulty articulating the circumstances under which unjust or inequitable conduct can justify piercing the corporate veil. Suffice it to say, it’s extremely rare.

Most states don’t have a clear standard governing when a corporate entity may be disregarded and the officers sued personally. However, no state makes it easy to pierce the corporate veil.

It’s rare to be able to successfully allege undercapitalization or commingling, as in most cases you don’t have access to any information that would reveal undercapitalization or commingling of funds. Similarly, it’s very unusual to successfully pierce the corporate veil.

Foreclosure and recovery of property

If you’re foreclosing on a lien or mortgage, you may be able to choose between judicial and nonjudicial foreclosure. If your state’s laws require judicial foreclosure, or you believe you may benefit from judicial foreclosure, you file a foreclosure lawsuit. The procedures for filing a foreclosure suit are different in each state. Foreclosure lawsuits can be tricky, so consider getting help from a lawyer.

You may initiate litigation to recover items of property that are in the possession of the debtor. For example, if an invoice wasn’t paid, you may want to recover goods you have shipped to the debtor. Actions to recover physical property are sometimes called replevin actions when based on statute, or detinue actions when based on common law principles.

Bad check actions

If your debtor has paid you with a bad check, you probably have a statutory claim for a civil penalty in addition to recovering the face value of the check. Some states also permit you to recover attorney fees.