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The Challenges Businesses Face When Owed Debts By Clients
Bankruptcy trustees see small business owners struggling every day because one of their largest customers defaulted on a loan or has filed for bankruptcy. Without operating capital, your small business faces bills you can’t pay and employees who have to be paid whether or not your clients or customers pay you. Knowing where to turn makes the difference between success and failure during these unexpected circumstances. An experienced Massachusetts commercial collection lawyer can evaluate your situation in minutes and advise you on how to proceed. Our debt collection attorney with 50 years of experience can place a lien on your customer’s property anywhere in the United States or file a bankruptcy litigation case to recover your assets. You may receive a lump sum payment from your consumer in the United States Bankruptcy Court.
Small Claims Court
Business insurance helps small business owners resolve disputes easily and quickly. Small claims court is the typical forum for collecting unpaid bills because it’s inexpensive and eliminates legal fees. A business owner can represent him or herself. Defendants don’t want their credit ratings damaged. They’ll usually find a way to pay their debts voluntarily.
You may have signed a contract that is not enforceable. Your contract may be illegal if it is based on lies, or it was signed under duress. If your contract is fraudulent, or it’s simply impossible to enforce as written, your contract is not enforceable and it’s unfair or illegal.
Your Spouse May be Liable for Your Small Business Debts
States are either common law or community property states. In common law states, you’re only liable for the debt if you signed the promissory note or your credit was used to get the loan. If you and your spouse jointly own the business, you’re both liable for its debts. Your state law is a factor in determining liability for your small business debt. If you incorporated your business or your business is a limited liability company (LLC), you and your spouse are not directly responsible for your small business loans. A cosigner, however, is as directly responsible for your debt as you are. In the community property states of Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, you and your spouse are both liable for your business debts.
You’re Directly Responsible for the Acts of Third-Party Debt Collectors
Your customer may want to pay but is truly unable to do so, juggling debts, or trying to avoid paying you. You need to stay on the customer until the amount due is paid, but you should never harass people who owe you money. Send a demand letter. You could offer a one time discount or payment plan, but give the account to a collection agency only as a last resort. You want to maintain a good relationship with even a slow-paying client.
Statute of Limitations on Debts
Your state statute of limitations limits the number of years you can collect on a breach of contract. In Maryland, the statute of limitations is three years from when the contract was signed. A creditor can not sue you six years after you default on a contract. Nor do they have a right to charge off your debt if they fail to collect on the debt. Your business debts may be the result of a:
• Promissory note,
• Credit card account, or a
• Written loan agreement
Writing Off a Bad Debt
If your business provides only services, you can’t write off a bad debt. A tax write-off must be for goods. You can deduct the number of goods the customer received but didn’t pay for.
Small Business Owners
If you own a small business, you may be able to file for Chapter 11 Bankruptcy to liquidate some assets and distribute your money to your lien holders. If you file for Chapter 11 bankruptcy to reduce the amount due on your outstanding loans, increase the length of your loan contracts possibly from three to five years, and reduce your installment payments. Under the auspices of the U.S. Bankruptcy Court, you may be able to remove loans from your real estate, increase your cash flow, and improve your credit rating.
Massachusetts Debt Collection Attorneys
Of all the debt collection attorneys listed in the Massachusetts legal directory, our law firm is entirely devoted to commercial collections. Ninety-five percent of our cases our commercial collections within the state of Massachusetts or anywhere within the United States. Our law firm charges only contingency fees, and we’ll keep you informed of all correspondence or conversations with your businesses or clients so you know what to expect. Our lawyers are debt collection attorneys, not a collection agency. Our lawyers are as dedicated to recovering your money as you are.
Goldberg and Oriel
Call our Massachusetts commercial collections attorneys for a free initial consultation when you’re challenged with out-of-the-ordinary slow-paying clients or customers or have suddenly incurred financial problems that you don’t know how to solve. Our Boston debt collection attorneys charge no fee until we recover payments or a settlement on your behalf. Our law firm works with a national network of private investigators to keep track of your debtors in all 50 United States and approaches your clients when their financial situation improves. Our debt collection law firm collects fees from the interest that your delinquent customers owe you recovering the money you need to invest in your business and your employees.