The decision to send a tenant or former resident to collections should not be taken lightly. Federal laws, such as the Fair Debt Collection Practices Act (FDCPA), regulate how you and the collection agencies you hire can legally pursue unpaid debts. When it comes to rental and multifamily property debts, specific considerations unique to the housing industry must be accounted for to protect your business from legal risk and maintain good practices.
In this guide, we’ll cover the key steps for handling unpaid rental debts and explain how to navigate the collections process within the bounds of the law.
What Does It Mean to Send a Tenant to Collections?
Sending a tenant to collections involves hiring a professional collection agency to recover unpaid rent, fees, or damages owed by the tenant. Typically, property managers attempt to collect these debts on their own through standard communication methods, such as letters, phone calls, or revised invoices. When these efforts fail, a collection agency becomes the intermediary that takes over the debt recovery process.
Unpaid rental debt poses a significant challenge for the multifamily housing industry. Even a single delinquent account can disrupt cash flow and impact property operations. Partnering with an experienced collection agency ensures that property owners can recover these debts efficiently and professionally while adhering to federal and state laws. Taking a proactive and compliant approach helps mitigate potential losses and supports the financial health of multifamily businesses.
When Should You Send a Rental Account to Collections?
Experts generally recommend waiting at least 90 days after the rent or payment’s due date before sending the account to collections. This period allows property managers to take preliminary steps to recover the debt while exploring alternative solutions with the tenant.
One such alternative is Resident Advocate, a proactive solution that helps resolve unpaid balances before resorting to collections. This program focuses on early intervention by working directly with tenants to recover debts while maintaining positive relationships. For property managers, this offers the advantage of early recovery and lower fees compared to traditional collection methods. Implementing such programs can reduce the need for escalated actions and provide a more efficient resolution process.
Steps to Take Before Sending a Tenant to Collections
1. Reach Out Directly to the Tenant
Begin with a phone call or email to remind the tenant of the outstanding balance. Maintain a professional tone and be clear about how they can resolve the debt. Avoid accusatory language, and instead, emphasize resolution.
2. Send Formal Notices
Issue clear and consistent written notices, including late rent notices and final demand letters. These documents serve as formal reminders of the outstanding balance and can detail the consequences of nonpayment, including being referred to collections or legal action.
3. Provide an Updated Invoice with Fees
If allowed by your lease agreement and local laws, add late fees or other charges to the balance. Resend the invoice to the tenant to encourage payment while clearly outlining how the fees were calculated.
4. Offer Payment Plans or Settlements
For tenants who are unable to pay the full balance, consider offering a payment plan or a reduced settlement amount. This can save time and resources compared to escalating the matter to collections.
5. Document Everything
Keep meticulous records of all communications, invoices, and agreements. Documentation is essential if the case moves to collections or litigation.
6. Consult Legal Counsel
If your attempts at resolution fail, consult with an attorney who specializes in landlord-tenant law. They can advise whether pursuing collections or another legal avenue is the best course of action.
What to Avoid in the Rental Debt Collections Process
Whether handling collections internally or through an agency, ensure compliance with federal and state laws by avoiding these prohibited actions:
- Harassment or Excessive Contact
- Do not call tenants outside the hours permitted by the FDCPA (8 a.m. to 9 p.m.) or repeatedly contact them in a manner that could be considered harassment.
- Inappropriate Communication
- Avoid contacting tenants at their workplace if they request otherwise, and never disclose the debt to family members, friends, or employers.
- Failure to Verify the Debt
- Ensure the debt is verified before pursuing collections. A collection agency must provide a validation notice to the debtor within five days of initial contact.
- Threatening Illegal Actions
- Do not threaten eviction, lawsuits, or other legal actions unless you are prepared to follow through and such actions are lawful.
- Making False Statements
- Avoid any misrepresentation of the debt amount, legal consequences, or agency affiliations.
Choosing the Right Collection Agency for Rental Debts
When deciding to hire a collection agency to recover unpaid rental debts, consider the following:
- Experience in Rental Collections: Select an agency with expertise in housing-related debts. Rental debts involve unique legal and procedural nuances that require specialized knowledge.
- Licensing and Certification: Ensure the agency is licensed to operate in your state and adheres to industry standards, such as membership in the Commercial Collection Agency Association.
- Compliance with Laws: Verify that the agency strictly follows FDCPA guidelines and state regulations.
- Insurance: Ask for proof of errors and omissions insurance to protect yourself from liability arising from the agency’s actions.
- Transparency in Fees: Collection agency fees can range from 20% to 50% of the recovered amount. Be clear about the costs involved and how they will impact your net recovery.
Additional Tips for Multifamily Property Managers
Rental debt collections are subject to state-specific laws that can vary widely. Familiarize yourself with local eviction, tenant protection, and debt recovery regulations.
- Include Clear Lease Language
- Ensure lease agreements explicitly outline late fees, collection procedures, and the tenant’s responsibility for unpaid debts.
- Use Rent Payment Portals
- Digital portals with automated reminders can reduce missed payments and improve record-keeping for delinquent accounts.
- Screen Tenants Thoroughly
- Prevent rental debt issues by performing robust background checks, including credit and rental history.
- Stay Informed on Local Laws
- Rental debt collections are subject to state-specific laws that can vary widely. Familiarize yourself with local eviction, tenant protection, and debt recovery regulations.
Multifamily Debt Recovery Made Easy with Hunter Warfield
When it comes to recovering rental debt, Hunter Warfield stands out as a leading collection agency in the multifamily housing industry. With a user-friendly client portal and seamless integration with most property management software, Hunter Warfield makes the process of sending a tenant to collections straightforward and efficient.
One of the key advantages of partnering with Hunter Warfield is their contingency-based fee structure: property managers only pay fees if the debt is successfully recovered. This ensures a risk-free approach to debt recovery, maximizing your returns without upfront costs.
How to Send an Account to Collections with the Hunter Warfield Online Portal
Before using the Hunter Warfield Online Portal to send an account to collections, you must first sign up for an account with Hunter Warfield. If you haven’t signed up yet, contact the team to get started.

The Hunter Warfield Online Portal simplifies debt recovery. Just log in, access the Claim Center, and choose to submit a single account manually or upload multiple claims at once.
For better recovery rates, include the debtor’s Date of Birth, Social Security Number, and a signed agreement to verify the balance. If you forget a document, you can add it later in the Client Center.
This quick and efficient process helps property managers recover debts faster and with less hassle.
Sending accounts to collections doesn’t have to be complicated. With the Hunter Warfield Online Portal, you can manage claims quickly and efficiently while maximizing recovery.
Need to send an account to collections? Book a Demo to ensure you’re making the most of your collection’s strategy.