Extending credit to businesses or individuals is a necessary part of a lot of businesses, and the process often includes collections. When your business gives credit to other businesses or individuals directly, you become their creditor. Generally, being a creditor is simple—at least as long as your customers are making their payments in a timely fashion. It is when they stop paying as agreed that the hard work begins. The U.S. Fair Debt Collection Practices Act specifically addresses what debt collectors can and cannot do to try and get your money back, and if your business is in this situation, you may want to speak with a competent Orange County business litigation lawyer who can further assist you in this area.
There are a few steps that your business can take to collect the debt and still be within the bounds of the law while doing so. For instance, if a large number of your customers have stopped paying, you might want to consider using a collection agency that will report to Dun & Bradstreet or other business credit reporting agencies (if you’re attempting to collect from another business). However, if your company only has a small problem with unpaid debts and your overall non-paying accounts are minimal, you may want to consider asking a knowledgeable Orange County business litigation lawyer to write demand letters to the owners of deadbeat accounts, demanding that they satisfy their contractual payment obligations. This is where a good solid credit agreement comes in handy.
Further, litigation is seldom a cost-effective route for the businesses that are trying to collect, but some do use small claims court and represent themselves. You should note, however, that even if you are successful in getting a court judgment, you will still need to take that judgment and use it to be able to discover enough of your customer’s assets in order to make the whole process worthwhile.
All things considered, business owners must take into account the real costs of chasing down a deadbeat customer, as well as the loss in productivity from having to assign a number of resources to collect potentially uncollectable funds. Thus, making wise business decisions is the best way to deal this difficult task. If you need the assistance of an Orange County business litigation lawyer as you start making some of those decisions, please call Daily Aljian LLP at (949) 861-2524 for a free consultation.