The people/clients we work with run the gamut from business owners, C-level executives, companies of all sizes and collection managers. Larger companies may have a dedicated collection manager that we work with, while we might deal directly with the CFO of a small to mid-size company. Depending on how large a matter it is, we might work directly with the owner/principal. Ultimately, we’re available to anyone who needs our services, even an individual who lends money to a friend for an investment and isn’t paid back.

When Do You Generally Get Involved In The Debt Collection Process?

I would say that almost one hundred percent of the time clients have first attempted to collect the debt on their own before involving an attorney. When the due date comes, they email or call the debtor to ask what’s going on and why they haven’t paid, instead of instantly phoning me. Some clients are more aggressive than others, while some let quite a bit of time lapse before they attempt to collect a debt. Generally, I get involved after the client has made some attempt or attempts to collect the debt weeks, months, or even years before they reach out to me.

We have many attorneys who refer us cases in which they’re client has obtained a judgment but the attorney has not been able to collect or simply doesn’t know how. . Therefore, our involvement can begin a few weeks after a debt becomes due or after the debt has already been converted to a judgment.

What Debt Collection Problems Arise From Commercial And Consumer Transactions? Why Is Obtaining The Judgment Only Half Of The Battle In Most Of These Cases?

Our firm focuses mainly on business-to-business debts, rather than business-to-consumer debts. As I said, our services run the gamut and can begin at any point in time, whether that’s right after a debt becomes due or post-judgment. For those clients who are having problems locating a debtor, we work with investigators who help us not only find them, but also discover what assets and liabilities they have.

Many of our clients prefer to work something out informally with their customers, and we’re sensitive to that. If a client doesn’t want to file a lawsuit, we’ll attempt to negotiate a settlement without having to go to court. We might put the debtor on a voluntary repayment plan if they can’t pay the entire balance in full. We’ll draft a written agreement that is generally more enforceable than what the client may have in place. Some clients only have invoices or purchase orders; while we can collect on those, it’s better to have an agreement that lays out all the terms and provides for attorney’s fees if the debtor doesn’t pay under the agreement.

If negotiating a settlement without going to court fails and the client is willing to proceed, we will file a lawsuit against the debtor, especially when it’s a large enough dollar amount or when the client feels strongly about continuing collection efforts. At this point, we’re moving toward a judgment or hoping to settle now that we have more leverage over the debtor with the pending lawsuit. It’s often easier to secure a settlement after the lawsuit is filed than before. Just because we file the lawsuit doesn’t mean we have to go all the way to conclusion. We can stop at any time if the other side is willing to pay or work out a settlement or if the client simply decides that is what they want to do.

When we can’t work out a settlement, then we push to get a judgment against the business or individual. That judgment is just a piece of paper signed by the judge or by the clerk (if it’s a clerk’s judgment) that says the losing party owes the money. The court doesn’t go and collect the money for you—that is a misconception that many people have. They think, “Oh, if I get a judgment, I’m going to automatically get paid,” but that’s not the case. Securing a judgment can be only half the battle.

Once we have a judgment, if the other side doesn’t simply open their checkbook and write us a check, we have to figure out ways to enforce the judgment, which is the rest of the battle. There are many different tools we can employ under California law to enforce a judgment. Whether we’re dealing with an individual or a business and what type of assets they have will determine which tools are appropriate to utilize.

One of the easiest and most cost-effective tools we use is a bank levy. The only outside information we need is where the debtor banks. For that reason, we recommend that clients retain a check copy if the debtor has made any payments. Credit apps will also usually provide where the debtor banks. We attempt bank levies first in many cases and they are often very effective.

In California, we can also recover accounts receivables that are owed to your debtor, so if we know the identity of a debtor’s customer, we can levy on the customer and force them to pay us instead of paying the debtor. In addition to bank and accounts receivable levies, there are also levies on real property, wages, vehicles and other property, in addition to other tools that we can use to collect.

For more information on Debt Collection Law in California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (714) 594-6322 today.

Art Matthews

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