Creditors have options when seeking to collect

On Behalf of | May 31, 2017 | Creditors' Rights |

A musician whose band had the good fortune to open for Chuck Berry decades ago remembers the guitar great befriending him between the opening band’s set and Berry’s performance. Upon discovering the opening act had not been paid before the show, Berry marched with the musician to the promoter’s office and insisted the opening act get paid in cash immediately or he would not go on. Always get paid before you play, Berry advised.

Turns out, he knew what he was talking about. As this musician tells it, the show promoters were long gone before Berry finished playing, leaving security workers and others hired for the event wondering how to collect what they were due.

In business, it’s frequently not possible to be paid up front. Customers who owe businesses substantial amounts of money often wind up filing bankruptcy. Creditors still have the right to pursue payment. Here are some options businesses can take to collect from debtors:

Self-help – Most creditors make several attempts to resolve past-due accounts before initiating legal measures. This may include enlisting the services of a debt collection agency. Of course, a debt collection agency costs money itself and often an agency settles for less than the total amount owed. What’s more, business risks tarnishing its own image if a debt collection agency it hires does not adhere to laws such as the Fair Debt Collection Practices Act (FDCPA).

Replevin action – Instead of seeking payment, a business may seek to recover property that is the subject of a debt. A well-known example is the repossession of a car when payments are missed. Typically, replevin requires the creditor meet specific notice and hearing requirements before recovering property. Legal guidance is advised.

Court involvement – A creditor can file a lawsuit requiring payment or return of the property. In instances where property may lose its value quickly, it is important to move swiftly. As with replevin, a creditor often seeks assistance from law enforcement officials (such as a sheriff’s department) to reclaim the property.

Every case involving a debtor and a creditor is unique. It is always wise to consult with an experienced creditors’ rights attorney to learn the best course of action in your matter.