Commercial debt collection involves more than hiring a collection agency. The process of collecting starts with the company that puts agreements in writing. Relying on a handshake or oral agreement may feel better, but a good contract and a paper trail make a difference. It provides evidence in court that can help win cases, but it also acts as a potent reminder to the debtor that they owe money. This starts when the creditor sends a demand letter.
Putting a lien on assets
It may happen that collection agencies had no luck, so collections attorneys will often immediately investigate the business. It involves looking for assets and then strategizing for the appropriate prejudgment attachments, such as a lien on their property or accounts receivable. This helps ensure payment when the debtor loses their commercial debt collection lawsuit.
The litigation or negotiation
Once the attachment is in place, the business can initiate the lawsuit to enforce the lien. It may not end up in court – the two sides may be able to resolve matters once they enter negotiations or arbitration. If these are ineffectual, the creditor can serve papers. The debtor must then respond within the deadline.
If they do not respond, the creditor then requests a default judgment. It establishes that debtor owes the creditor money. The creditor can likely still rely upon litigation and the prejudgment attachment to better ensure payment. During this phase, the creditor can request an assessment of damages and a monetary judgment.
Enforcing the lien
One way to do this is to get an abstract of the judgment from the sheriff’s office, where property with a lien is. The deputy will then take possession of the real estate for the creditor. The creditor is then able to sell the property to recover the amount owed.
Many options for solutions
This is a brief overview of a complicated process. Moreover, it need not conclude with the enforcement of the lien. The debtor may pay their debt, or the creditor offers a compromise agreed to by both sides.