Unless you work in accounting or deal with financial statements on a regular basis, you might not think of hiring an attorney if someone fails to pay you. However, if your business is operating as expected and your clients are not paying you for services rendered, it might be time to consider hiring a collection attorney. An attorney can help recover those funds so that your business continues uninterrupted. Here’s why and when you should hire a collection attorney:
A company or individual still owes you money.
If someone owes you money, it’s important to collect on the debt as soon as possible. Not only is this a necessary step in order to keep your business afloat, but it’s also the right thing to do. You’ve probably already put a mark on your client’s or customer’s credit report (if you’ve been working with the customer for a while), which makes it harder for them to take out loans and find financing in the future. If you’ve given the debtor ample time to pay the debt back, it’s time to hire a collection attorney.
You’ve given a client or company more than enough time to pay.
There is no set amount of time that is appropriate for collecting a debt. Instead, it’s more about the nature of the business. If your John Doe Contractor has been working on a house for several months and still hasn’t been paid, it’s time to hire a collection attorney. You’ve already given him several months to pay you back, but he still hasn’t paid.
Your attorney has issued a demand letter and the debtor still refuses to pay.
If you’ve already sent a demand letter to the debtor, it’s important that they respond. If they don’t respond in any way, they are essentially admitting to owing the debt and no longer intend to pay you back. Once you know that the debtor has no intention of paying you back, you can hire a collection attorney.
You have sufficient evidence of fraud.
If you have sufficient evidence of fraud (such as documents showing that the debtor falsified financial documents in order to receive financing from a bank), you can have the debt written off. However, you’ll have to take the debtor to court. In this situation, you should immediately hire a collection attorney.
You are in danger of losing merchandise or equipment because of the debt.
If a client has purchased merchandise or equipment from you, but has not paid for it, there’s a chance that they’ll file for bankruptcy and the court will order the merchandise or equipment to be returned to you. If this is happening to you, it’s time to hire a collection attorney.
You’re worried about your business reputation when it comes to future clients.
If you’ve already tried to work with a client or customer to collect on a debt and it’s clear that they’re not going to pay, it’s time to hire a collection attorney. At this point, you’re probably worried about your business reputation, and hiring a collection attorney is a good way to avoid a bad reputation.
The debtor is making false promises about paying soon.
If the debtor is promising to pay soon but has no intention of actually paying the debt, it’s time to hire a collection attorney. You don’t want to fall for false promises and end up wasting time that could be spent collecting on other debts.
The Debt is From an Important Client Or Customer
Finally, if you’ve been working with a client or customer for a long time and they refuse to pay, it’s time to hire a collection attorney. You don’t want to lose that client, but you also don’t want to be taken advantage of.
How Do Collection Attorneys Work?
Once you’ve hired a collection attorney, they will typically try to reach out to the debtor. If they’ve already spoken with the debtor, they’ll let them know that they’ve hired an attorney and that they plan to take legal action against them. The attorney will often put a lien on the debtor’s property, which is a right that they have as a creditor. If the debtor is refusing to pay you, the attorney will work with you to file a lawsuit against them. When it comes to suing a debtor, there are a few things that you need to consider. You’ll need to decide where the lawsuit will take place, what you’ll be suing the debtor for, and how much the lawsuit might end up costing you. You should also decide how you want to serve the debtor.