Someone Owes you Money

The world of debt collection is clouded with pictures of a poor family on their last leg, paying for electricity to heat their studio apartment with a credit card that is far overdue in payments and about to be declined when they try to buy their next meal.  Then the debt collector calls the poor family and hounds them until they pay up.  No one likes that damn debt collector.  This, of course, is an extreme case that unfortunately unfolding a multitude of times a day across the country.  It may not be instantly apparent, but debt collection does keep businesses going.  If no one had to pay – would you?

This is a quick overview of collection practices.  There are two types of debt, commercial and consumer.  The ways that they are collected are quite similar except that when it comes to consumer debt. 

 When dealing with consumer debt there are many more issues and laws to make sure that you, or your attorney are complying with.  The Fair Debt Collection Practices Act (FDCPA) was created and is enforced to protect consumer debtors from a myriad of prohibited practices that debt collectors have used to get payments from debtors.  These practices include calling debtors at midnight or calling them at work.  It is important for debtors of consumer debt to know their rights.  You may be a deadbeat that never intends on paying for something you bought, but you shouldn’t have to be treated like one.

Here at our law office we like to deal with commercial debt.  Generally, if you are a business and you sold goods or services to another business and they did not pay for them, you have a right to sue for the money owed.

Jurisdiction

            If you are owed $2500 or less you should take your claim to small claims court.  It is cheaper to file and everything about it is faster and easier.

            If you are owed $2500 or more you must take your claim to the District Court.  At the District Court you should have an attorney and the process will cost more to file your complaint and will take longer for it to be resolved. 

            If you are owed a substantial amount of money you should definitely contact your attorney and they will file the case in the Superior Court.  This is even more expensive, and the trial wait times are even longer.   

Contract

            Most Commercial collections cases are based on a contract that was fulfilled but not paid for in full.  Now one important issue is to make sure that the contract your business uses has provisions in it for collecting debt that includes a line in there about the purchaser agreeing to pay for collection costs including attorney’s fees.  This will save you a ton of time and money and really only adds a little bit more language to your bills, credit applications, etc.

Complaint

            After you’ve tried your darnedest to get your debtor to pay you, by sending letters and making calls, there comes a point when you have to file a complaint.  Any Incorporated entity should have an attorney handle this.  It consists of list of how much is owed and for what, and affidavit to those facts, and a statement of damages.  Once filed the debtor has 20 days to respond to the complaint or come to an agreement with you as the creditor.

Judgment

            Assuming that the debtor really does not have an argument as to why they did not pay for the goods or services they have used, you may file for a judgment and execution.  But now you still don’t have any money.

Collecting your judgment

            At this point you have your judgment and execution but need to make a strategy on how to collect the actual money owed.  There are many ways to go about doing so.  Property can be levied upon and sold to help pay off the debt.  Bank accounts can be levied and through trustee process income to the debtors business or income to the debtor can be attached.  If none of that works you may even file for a “capias” which will allow a constable to pick up the debtor from where ever they may be and bring them into court to answer to why they have yet to pay for the debt they have been adjudged to owe.

Conclusion

            Collecting debt is difficult.  These are hard times.  It is important to get in on the list of creditors on any bankruptcy.  It is also important to get priority over other liens the debtor may have.  The best way to collect a debt is to get an attorney who is willing to fight for the small percentage that they will receive.