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COLLECTION'S CORNER : Deferred Billing

This month in Collection's Corner, we are focusing on deferred billing. Our office offers two different billing options with respect to collection cases: contemporaneous billing (i.e. "pay as you go") or deferred billing. Unlike contemporaneous billing where you receive an invoice for all actions completed on a collection matter and costs incurred during the prior month, with deferred billing, the legal fees are incurred but not invoiced until a "triggering event" occurs. Triggering events include, but are not limited to, bankruptcy filing by the delinquent owner, sale, or other transfer of ownership of the property including foreclosure, writ of execution, death, obtaining a personal judgment against the owner, or if management accepts and processes a payment from the delinquent owner. Once a triggering event occurs, all deferred legal fees will be "brought forward" meaning you will receive an invoice for the deferred amounts in the next month's invoice. Also, while our legal fees will be deferred, the community will still be billed contemporaneously for any actual costs incurred, such as filing fees, private process server fees, title work and the like, because those costs are paid upfront on behalf of the community by our firm.

Please see our January 2019 Special Client Letter for a complete list of triggering events under the deferred billing option, as well as a more detailed explanation of our billing options so you may compare them and determine if you want to change your current billing option. We are happy to provide you with another copy of our January 2019 Special Client Letter upon request.

Our firm provides the same level of service to our deferred billing clients as our clients that are billed contemporaneously. We ensure that all deferred amounts are accounted for and a statement of the allocation of funds received under the deferred billing option together with the total amount of legal fees outstanding is readily available for our clients' review upon request, and we also provide a monthly status report for all collection cases. Additionally, if we receive payment from a delinquent owner in excess of the legal fees owed on that account, our office will issue an escrow check for any remaining accounts together with a statement of account reflecting how the payment was applied. With respect to the allocation of payments, unless your community's governing documents direct otherwise, our office follows generally accepted accounting principles ("GAAP") and applies a payment to the oldest debt first, working from outstanding fees and costs (including attorneys' fees), then to interest, late fees, and finally to the principal balance.

Please contact the managing attorney for collections, Pallavi Kachoria by email at [email protected] or 410-740-8100, ext. 133 if you have any questions about our billing options, or if you are currently under the deferred billing option and you would like to request a statement of the outstanding legal fees due to the Firm.

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Nagle & Zaller, P.C.
7226 Lee DeForest Dr.
Suite 102
Columbia, MD 21046

Phone: 443-535-6940
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