Running a business can be one of the most rewarding experiences of your life. You had a concept, you have the passion, you found the investors, and off you went, building your business brick-by-brick. Your small business may be thriving, but what happens when your loyal customers fail to pay you on time, or at all? While consumer protection laws help shield debtors from harassment and unscrupulous behavior from creditors, your small business isn’t without recourse, assuming you follow the law and procedures put in place. You ultimately may end up having to go to court and will need a collections attorney in the process. Below you will learn about the first steps you should take to collect on a past-due account, how to write a collections letter, and why a collections attorney may be right for your situation.
Collecting on Business Debts
Before you call in the “big guns,” you should first take all reasonable (and legal) steps to collect from your customer or on your contract with another business. If you’ve completed the work or delivered the product, sent the invoice, and have received no response, don’t panic yet. Use a measured approach to collect on the account. Start by sending a debt collection letter, reminding the customer or account-holder of their missed payments and providing an opportunity to correct the situation. You can send an initial letter, a follow-up letter, and a final demand letter before escalating further.
Should I Hire a Collection Agency?
Whether or not you hire a collection agency will ultimately depend on your specific situation. While there isn’t a one-size-fits-all approach to using a debt collection agency, be sure the agency is licensed and bonded and operates in compliance with the Fair Debt Collection Practices Act. Remember, there are many consumer protections in place that stop debt collection agencies from harassing or abusing debtors. Be sure you are aware of these protections or you may be in violation of the law.
How a Collections Lawyer Can Help
A collections lawyer can help you in a number of ways. First, you can receive personalized help with your situation. A lawyer will be able to explain the proper procedures and help you draft a well-crafted debt collection demand letter or offer other solutions to your issue. This may include visiting the customer personally or filing for a mechanic’s lien in certain limited real estate contractor situations. A lawyer may also be able to advise you on whether to use a collection agency or seek a court-based remedy to ultimately collect on the debt, i.e. filing a lawsuit and hopefully receiving a judgment in your favor. A collections lawyer can also guide you through the process of collecting on your judgment.
Debt Collection Attorneys: Related Resources
Learn More from a Collections Attorney
Small businesses rise and fall by the culture they create and the practices they live by. If you want your small business to be successful, you probably have questions about how to legally collect debts owed to you. If you are curious to learn more or want to explore a possible lawsuit against a delinquent debtor, speak with a collections lawyer in your area today.
Learn more about state-specific laws on our collections law legal answers page.