Creditor’s Rights

What Services Does Your Firm Provide Creditors Attempting To Collect On A Debt?

First, we discuss what the creditor’s objectives are with the debtor. We have them recognize that this is about collecting money, not about being right or wrong. We discuss the nature of the debt and whether the debt is an obligation of another person or entity as well, so that we can lay out what is the best approach for trying to collect that debt. Next, we discuss the various means of collection and what is available. We discuss the budget and trying to negotiate a settlement. If that does not work, we will discuss commencing a court proceeding against the debtor.

We see what interim remedies, such as attachment or receivership, are available. We research theories for recovery. Sometimes, business make fraudulent conveyances of cash or property outside of the business. So, we consider various lines of attack and leverages that there may be. We also consider whether bankruptcy is an alternative.

What Is The Difference Between Using A Collections Agency And Going Through A Creditor’s Rights Attorney To Settle A Debt Owed To Us?

It costs more to use a creditor’s rights attorney than a collections agency. However, the price is related to the rate of success. If a collections agency has contacted you, be polite and communicate with them but they can’t really do anything. The only thing they can do is send you a letter saying that if you do not respond, you can’t dispute the amount that is owed.

I see using a collections agency as a waste of time and money. They cannot go to court, so the agency will either tell the client to get a lawyer or refer the matter to a lawyer themselves. It is just a delay of the inevitable. A lawyer has experience and is aware of the law that is involved in collections. Lawyers generally know more about what can be done than a collections agency does.

Collections agencies’ personnel frequently lack skill and often make mistakes in communicating with debtors. For example, when they call me, they say they are calling about a mutual client. This is fraudulent. My client is not their client. Their client is the person they are trying to collect money for. Lawyers are able to sue, go to court, and seek out other forms of remedies that collections agencies do not have access to.

If A Debtor Files For Bankruptcy, Is There Anything That Can Be Done To Collect On A Debt Owed To My Business?

Bankruptcy is there for creditors as well as debtors. First, we determine who owes money. Sometimes, there will be a guarantor who is not in bankruptcy. So, you have the ability to collect not just from the debtor but a potential guarantor. You may also participate in the bankruptcy process by filing a proof of claim. If you are dealing with an individual, as opposed to an entity, their claims may be non-dischargeable. They may have committed frauds along the way, so you could object to the discharge of the individual debtor, if they have filed.

If you shipped goods to the debtor, you may have what are called reclamation claims. If you ship goods within 45 days or 20 days prior to the filing of the bankruptcy case, you can make a demand for the return of those goods. As far as goods that are received within 20 days of the filing of the bankruptcy case, you will have a priority claim above other creditors for the payment for those goods. Frequently, claims will be subject to the claims of secured creditors.

Always look to see who else may owe you money for the same debt. You may have co-debtors based upon commercial agreements such as joint-ventures or guarantees. You may have joint tortfeasors or you may have had a commercial fraud done to you where someone else assisted, or anti-competitive violations.

What Is The Statute Of Limitations For Filing A Judgment Against A Debtor In The Areas That You Practice In?

The statute of limitations generally depends on the nature of the claim. In New York, the statute of limitations for most commercial type claims is six years. For fraud it is six years. If the fraud was hidden, add two years from the date of discovery or when the discovery could have been made. The statute of limitations for the taking of property with the intent to keep, or conversion is one year.

Once The Court Has Ruled A Debt Owed To Us Is To Be Paid, What Measures Can Be Taken To Ensure That Actually Happens?

A judgement gives its holder the right to use various remedies to collect on the judgment mainly using force of law. A judgment does not give a judgment creditor the right to be paid. Nor, does it create a duty on a judgment debtor to pay it. That means that judgment creditors cannot hold judgment debtors in contempt for failure to pay their judgment. However, there are various enforcement remedies. The first is locating the judgment debtor’s assets or where they have gone over time. This enables you to locate them and levy on them. Levying entails having a sheriff put a lien on those assets, freeze them, and sell them and use the proceeds of that sale to pay you.

You can have parties who have received or are holding the judgment debtor’s assets be directed to turn them over to you. Sometimes, you have judgment debtors who have done fraudulent transfers to creditors. You can commence proceedings to turn over the property. If you are dealing with an intentional fraudulent conveyance, your attorney’s fees are also paid. Depositions are used to locate assets. Most jurisdictions make the entry of a judgment a lien, like a mortgage, on real estate owned by the judgment debtor in the county where the judgment is entered. Judgment creditors can record transcripts of that judgment in other counties around the state, where the judgment debtor may own property.

You can file an involuntary bankruptcy case. If you are a judgment creditor, you have a much better position. You don’t have to worry about your claim being subject to a bona fide dispute. You usually need two more creditors to file an involuntary bankruptcy. In bankruptcy a trustee will be in charge of martialing all of the debtor’s assets and bringing them together for all creditors. A non-bankruptcy alternative is having a receiver appointed to enforce your particular judgment. If you’re aware of fraudulent conveyances, you can do a fraudulent conveyance action simultaneously with your action to collect the judgment. There are many people who do not consider doing that, but we will do it instinctively. You don’t have to wait to do it and you are able to seek a receiver. The purpose is to have the debtor consider that they may lose their business as opposed to using litigation as a game.

Commercial litigation is not about right or wrong; it is about getting money and making the debtor focus on the business issues that they face. We look to freeze assets, through an attachment or a receiver to make our target try to speed up a commercial resolution by recognizing that they are in jeopardy and they have to do things sooner as opposed to later.

For more information on Creditor’s Rights, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (212) 739-7599 today.