From Negotiation to Litigation: The Legal Tools Available to Commercial Companies for Out-of-State Debt Collection

From Negotiation to Litigation: The Legal Tools Available to Commercial Companies for Out-of-State Debt Collection

Debt collection, whether as a business owner or debtor, is not a process people want to undertake; however, it is a necessary part of business as it ensures that employees, business bills, and salaries are paid. For commercial companies, debt collection can be a significant undertaking, but there are debt collection law firms and agencies that can help simplify this process. They can provide guidance and legal assistance throughout the process, thus ensuring that debts are paid legally and ethically.

Commercial debt collection usually involves business-to-business creditors paying off debts to another company. Debt collection law firms and agencies can help at the onset of this process by sending certified demand letters that inform the debtors in question how much the business is owed, their balance, and when the payment is due. Should the debtor mention that they cannot pay the debt in full, law firms can negotiate a payment schedule that ensures the debt is paid and that the company paying can do so in a timely manner. In the event that debtors have not been paying their debts, these law firms can resort to regular phone calls to remind said debtors of their payments; however, letters are more likely to be used in order to provide the law firm an advantage should a legal case arise.

An attorney may not seem necessary in the collection process, but they can provide a lot of assistance in legally navigating the process. This is because the debt collection laws may differ nationwide, so having an attorney to help navigate the different laws can be of assistance. There may be loopholes and unknown rules that a business owner may miss when reviewing the different debt laws, so having an expert lawyer to decipher these laws can be helpful and save the business owner precious time. As mentioned above, these lawyers can draft certified demand letters to be sent to the debtors and negotiate payment plans with the different companies to ensure their client gets paid accordingly. They can also assist in pursuing legal action should debts not be paid and enforcing past legal precedents should things escalate to that.

The process of debt collection is relatively straightforward, though it is still a tedious process. It starts with the business contacting the company that owes a debt. Most companies that owe a debt will be unaware that they owe anything, so it is up to the business in question to pursue these debts. Once again, the initial contact may come in the form of a certified demand letter, but some business owners may opt to call the company personally; this step depends on the rapport built between the business and their debtor and differs from case to case. However, it is recommended that a certified demand letter be sent as potential evidence in case of a legal proceeding. While it may not be likely that legal action will be taken, it is still better to have this evidence and not need it rather than needing the evidence and not having possession of it when the time comes.

Once the debtor has been notified, they have two options. First, they may pay the debt in full. This is the fastest way of dealing with a debt, as both parties are rid of the responsibility at once. Second, they may negotiate with the collecting company to create a payment schedule that allows the debt to be paid off in timely increments. While this process may take longer, it still ensures that the debt is paid, but it is done so within the financial constraints of the debtor. It is very possible that debtors do not have the money to pay off their debts right away, so negotiating a payment plan with the collector that fits their financial needs is a good compromise.

If the debtor is late or does not provide payments, there are also two options for the collecting company. Depending on the amount of the debt, the company can either walk away from the unpaid invoice or pursue legal action in order to force the debtor to pay what they are owed. The latter will require lawyers to get involved and may incur more expenses on both parties’ behalf. Walking away from an unpaid invoice can be considered if the unpaid amount is considered small; it is essential to consider the business relationship between the collector and the debtor so small amounts can be written off to preserve this relationship. This can be a dangerous mindset, as these small amounts can quickly amount to a large amount that the collectors may not be able to pay themselves.

For those interested in hiring a professional debt collection law firm, you can contact the National Collection Lawyers to book a free consultation.