Debt Collection for Business to Business
At the beginning of every debt collection case is the underlying lawsuit. Often times, filing your claim and proving your right to payment is the easiest part of the debt collection process. Many attorneys do not understand and don’t take part in the “execution process,” that is, seizing a debtor’s assets pay the judgment creditor (you). Execution on judgments can be just as, if not more, time consuming and costly as “winning” in a court of law. It is crucial to have an attorney that understands the full scope of the debt collection process before filing a formal claim. We focus on the end-game first. In working with you to decide whether to pursue the debtor, we utilize third-party investigators to check credit history, locate the debtor’s assets, and determine the likelihood of recovering your money.
In Pennsylvania one of the biggest challenges that creditors face is minimizing legal fees in order to maximize recovery. Many debts are forgiven because the creditors realize that they will spend more time and money trying to collect than is actually owed. Or, the attorney is able to get a judgment, but the business does not have enough recoverable assets. A million-dollar judgment is worthless if there is no chance at collecting; as the old saying goes “you can’t get blood from a stone.”
Depending on your specific needs we may offer representation based on a fee schedule for specific services, a flat fee, or contingency in the event of recovery. But, under no circumstances will we allow you to throw good money after bad, even if that means returning your retainer and ceasing representation. We continually evaluate your case and apprise you of the likelihood of recovery. That’s how we challenge expectations.
Very few Pennsylvania attorneys engage in the execution process, and only an experience attorney can maximize your recovery. Business debt collection is one of our strongest practice areas. Give us a call and see how we challenge expectations in the law.
HOW DOES THE DEBT COLLECTION PROCESS WORK?
THE DEMAND LETTER
Once the decision has been made to pursue the debtor, the first step is the Demand Letter. This is usually the first document forwarded by an attorney to the debtor. First and foremost, it alerts the debtor that an attorney is now involved in the collection process, which may in and of itself yield payment. Secondly, if the matter is disputed, it is an opportunity for the debtor to respond to an objective third party, setting personal feelings aside. If the debtor does not believe he or she owes money, the demand can start the formal negotiation process, allowing the debtor to check your legal position against his own counsel’s opinion. In many cases, an amicable resolution can be made without filing a lawsuit.
We approach every case with the attitude that even good businesses can owe a delinquent debt. We view filing suit as a last resort. If possible, we will establish a relationship with the debtor and manage a lump-sum or structured payment plan. Trying to negotiate with a debtor is exhausting and in many cases are bitter disputes. Having an experienced attorney on your side can make all the difference.
FILING A CLAIM?
If the underlying claim is legitimate, the debtor has recoverable assets, and reasonable attempts at negotiation have failed, a formal lawsuit may be advised.
The litigation process begins with the filing of a Complaint, in which the plaintiff (creditor) alleges the existence of a contract, a breach of duty imposed by the contract, and the resultant monetary damages. The defendant (debtor) will file an Answer to the Complaint, alleging any defenses to the claim. In the clearest of cases, the court may enter summary judgment before trial. Where there is a bona fide factual dispute, the case must go to a trial by judge or jury. Depending on the complexity of the case and the disputed facts, it may take several months or years before a case is scheduled for trial.
The ultimate goal of litigation is to force settlement or obtain a “money judgment,” which is an official decree of a legally indisputable debt.
WHAT HAPPENS AFTER I WIN THE CASE?
In an ideal world, the judgment debtor will voluntarily pay the plaintiff the full value of the money judgment. At that point, the judgment is deemed “satisfied” and must be removed from public record. Voluntary payment, however, is rare. At which point the plaintiff must hire an experienced attorney to engage in the execution process.
The Sheriff’s Sale
The law recognizes two types of property: real estate and personal property (which includes all property that is not affixed to the land). In the case of personal property, the attorney formally requests the sheriff to travel to the physical location of the property with a Writ of Execution. The sheriff will list the items on the writ and serve various papers informing the debtor that such property is now subject to a sheriff’s lien and scheduled for public sale. Real estate may also be subject to a sheriff’s sale. The proceeds of the sale(s) will go to the plaintiff.
These are the most common types of execution methods. Be advised, there are specific laws that apply to autos, bank accounts, etc.
Liens on Real Estate
The simple act of recording the judgment will automatically act as a lien on the defendant’s real estate located in the county. In most cases there are a number of lien holders (mortgagees, banks, and judgment creditors). The defendant must satisfy each lien in order of priority in order to sell the property. In other words, if the defendant sells the property, the real estate agency will make sure that you get paid before the defendant receives any proceeds of the sale (if there are any left).
The Payment Plan
Even the most evasive of defendants can grow tired of continuing execution attempts and property liens. These are good tools to bring dollars in, but they also provide leverage. Our office can manage a payment plan in exchange for staying execution attempts.
Very few Pennsylvania attorneys engage in the execution process, and only an experienced attorney can maximize your recovery. Debt collection is one of our specialties. Give us a call and see how we challenge expectations in the law.