Thinking about filing suit against a business to recover a bad debt?
Thinking about filing a lawsuit against a business to recover a bad debt? Here's a quick look at the advantages and disadvantages to litigation.
Among the advantages:
• It brings the matter to a head. Your debtor must decide to contact you to resolve the issue or allow judgment to be entered.
• You can begin post judgment remedies such as garnishing a bank account.
• The judgment becomes a matter of public record adversely affecting your customer's credit.
Among the disadvantages:
• It can be costly and can include court costs, commissions, suit fees or even hourly fees.
• You might have to defend a countersuit, although that very rarely happens.
• It can be confusing. The process of filing the suit, getting judgment, and executing on that judgment requires expertise and must be managed properly.
So, when deciding whether or not to sue, many factors play into your decision.
• The amount of the account – suing smaller balances may be emotionally satisfying, but your time is better spent elsewhere.
• Where to sue? Can I sue locally or must I sue in my customer’s jurisdiction?
• Do I need an attorney, and if so, which attorney?
• Is the customer still in business, and if so, what is their corporate status?
• Have they recently filed bankruptcy?
• Do they have attachable assets?
• Are there outstanding judgments or UCC filings?
To sue or not to sue requires a lot of thought, research and direction. I highly recommend you seek the assistance of an experienced business to business collection agency certified by the Commercial Collection Agency Association of the CLLA. The agency may be able to collect your account without going to the added expense of hiring an attorney. They can give you the necessary guidance to make the right decision.
Commercial Collection Agency Association