Some business owners quickly realize that informal methods to collect on outstanding accounts are generally not effective. At some point, especially with a sizeable debt, it makes sense to hire an experienced collections lawyer to represent the business owner in commercial collection efforts.
Commercial collection refers to collecting outstanding business debt; such debt collectors are not subject to the same state and federal laws that regulate debt collection of consumer debt. Some commercial debt collection agencies have attorneys in-house, who can step in as the situation requires it, while others have a partnership with law firms that specialize in debt collection.
A collection attorney can be a prudent use of a business owner’s money and time for a number of reasons:
– Legal tools: A collections attorney can evaluate and respond to a business owner’s concerns and use legal tools such as subpoenas to demand the debtor produce documents showing its assets and ability to pay. An attorney can also advise about working with local law enforcement to garnish wages or put liens on property. A lawyer well-versed in collection law will know how to efficiently and effectively use legal procedures and filings to assess the debtor’s ability to pay.
– Letter writing: In the early stages of debt collection, some business owners like to write letters to debtors documenting the sums owed and deadlines for payment. Unfortunately, many business owners ignore such letters if they come from someone other than an attorney. A letter from a collections attorney, however, has a serious tone and often the recipient is more likely to read it and respond.
– Lawsuit and/or negotiations: Lawsuits can be expensive, but depending on the amounts at stake, you may want to have a lawyer ready to step in and file suit if a business continues to refuse to make its accounts current. A lawyer knows how to use the court to protect certain assets by freezing bank accounts or real estate. Moreover, skilled attorneys are also experienced negotiators. This means that at any point during the pre-lawsuit stage or even before trial, the attorney will look for opportunities to settle with the debtor. A settlement, with a payment plan, is often preferred over other types of relief because it is less expensive than a trial. Furthermore, the parties, not the court, have the ability to put in writing what they want and therefore have more control over the outcome of the dispute.
For more information on effective commercial debt collection practices, contact attorney Ronald P. Slates today.