Frequently Asked Questions
Considering whether to take legal action on your bad debt:
Making the decision to file a lawsuit can be a difficult one. Based on experience, it is equally divided into two areas: obtaining your judgment and then being able to collect upon the judgment. Here are factors to consider:
How do we collect money from the debtor?
We initially start with an attorney demand letter. If there is no response, we attempt to follow up with phone contact. If there is still no further response, we will consult with the client to determine if we should file a lawsuit. The lawsuit will seek repayment of money owed, interest, all damages available for breach of contract and if applicable, attorney's fees incurred as part of the litigation process. When the judge awards a judgment to collect damages, the debtor becomes legally obligated to pay. Further interest may accrue.
How large must your claim be?
A small claim will not be worth the expense in court costs, travel time and attorney's fees to pursue. The size of the claim you send to collection depends on the amount of money you are willing to spend for court costs. We do not recommend filing suit unless your claim is in excess of $1000.
How much will my lawsuit cost?
Court costs are your biggest concern. The court costs to file suit, serve the debtor with summons and issue post judgment proceedings to collect the debt will cost $200 to $500.
Court costs include fees that you will be required to pay the court to file your lawsuit, have summons served on your debtor and for garnishing your debtor's wages, bank account or other assets. You may also have to pay detective fees and asset searches and in some instances, appearance attorney fees in outlying counties to appear and take judgments. We do not outsource cases.
Do you have good documents?
Do you have sufficient documentation to prove your case? Necessary documents include contracts, agreement confirmation letters, invoices, statements, delivery receipts, etc. If you don't have complete documentation, you may not be able to win at a trial if the debtor disputes your claim.
Do you have a witness?
If your case goes to trial, a person who has knowledge of the events must be available to present your case. If the person who handled the transactions is no longer working for you or cannot come to court to testify, you can substitute a person who is familiar with the debtor's file. This could be the collection or credit manager.
Does your debtor have assets?
Deciding if your debtor has assets is a key component of this process. If you don't know where your debtor works, banks or owns property, try to locate assets before you invest money in court costs. Hiring a detective to locate assets can save you money. If you can't locate assets, you can attempt to collect if after a judgment it taken, we bring the debtor to court to testify about his assets.
Deciding to file a law suit is based on a hard examination of your chances to win. If you assess your documents, witnesses and costs before you file suit you will strengthen your chance of winning in court . And if you conduct an income/asset assessment before initiating suit, you will determine the ability to collect any potential judgment. In my initial consultation, I review your documents and on line sources, to help you assess your case.
How do we collect on the judgment?
A judgment gives us the power to do three things. We can register the judgment as a lien on real estates. We can also garnish the debtor's bank account or wages. We can also conduct a debtor examination, where they are served with papers requiring they appear in court and testify about their assets and ability to satisfy the judgment.
How do I know if my case is collectible?
The answer is you don't. You can do background checks on assets, vehicles, bank accounts etc. However, collection is not a game of certainty. Many times, we will collect debt on cases we thought may be difficult, and other times individuals with plenty of cash are able to avoid collection. The keys to collecting are patience and consistency. Once you obtain the money judgment, you need to be smart about how much you will pay in attempting execution on the judgment and about what other options are available. Each case is different, but more often than not, debt can be collected if the party remains persistent.