When to Work With Debtor vs. File Suit

Every business owner has heard promises that the check’s in the mail from their delinquent accounts. This oft repeated line and a host of other excuses that may or may not be more believable are common when accounts are past due. How does a business owner know when to accept the delay and when to insist on immediate payment by threatening to file suit? Experienced Collections attorneys are a good source to consult in these circumstances.

One of the first things an attorney will do is check the court dockets and see if other actions are pending against your debtor customer. Once your customer gets involved in collections actions, you need to file too since whatever assets are available will get snapped up. An experienced collection Attorney can often sense when a company is going to file bankruptcy and will advise a lawsuit rather than payment plan which will be subject to avoidance by the Bankruptcy Trustee.

The best time to allow an account some leeway is when it’s part of a pay when paid contract. These are common in the construction industry. The individual sub-contractors who provide plumbing, electrical, glazing and painting aren’t paid until the certificate of occupancy issues and the general contractor gets paid. Sometimes one trade holds up the process for everybody. Trying to work with a client in these circumstances is advisable.

If your business has accounts in arrears and needs advice on which to extend terms to and which to institute proceedings against, contact us. We can investigate their current financial standing, check court records and help develop a plan to recoup the debt and ideally preserve the ongoing business relationship.