No matter how carefully they construct their credit application, businesses will sometimes find that customers, contractors or business partners do not pay their bills on time. The debtor may explain to the creditor that they are behind because business is slow, they are over-extended, or they, too, are owed money.
Savvy creditors know that money owed to a business is an account receivable, which is an asset. Unless it is exempt, creditors often can seize an asset to satisfy a debt owed. The debtor may be in financial trouble because they aren’t aggressive about collecting a debt, but the creditor need not also be ineffective with their collections.
Rather than turn the matter over to a collection agency, businesses can work with collections attorneys adept at finding unprotected assets to satisfy the debt.
Third-party levy in Texas
A third-party levy is a good option for collecting money. To execute this legal process, the creditor must follow a process. The steps include:
- File a $10,000 surety bond with the Texas Secretary of State.
- Secure a writ of execution in the county or counties where the debtor’s debtor is located.
- Deliver the original writ of execution to the sheriff or constable’s office. It should include instructions for where, when and how to serve the levy.
- Arrange for the service of levy-related paperwork.
- Once the documents are received or served, the third party must respond with an answer before the deadline. It must explain how much it will turn over the money owed or why it will dispute the levy. The creditor may also have discovery requests. If the debtor ignores the lawsuit, they automatically default.
- Money or assets are collected by the sheriff or constable’s office, which then turns it over to the creditor.
It is helpful for the creditor to understand the third party’s business and strategically serve the levy when it has money or assets to satisfy the debt. This may be the end of the month, the end of the quarter or when a large payment arrives.
Skill, focus and tenacity
Third-party collections involve skill, planning and tenacity, but the results are often worth it. Rather than leave the matter for the debtor to solve, this approach uses an attorney to take control of the situation to do what is necessary.