How long do I have to wait before I can use an attorney to collect a business debt?


Each state has its own laws regarding collecting business debts. Bills are due on a certain date, and at least in theory, you could start legal action the day after the due date. Most businesses give customers a little more leeway than that. You might also have a better chance in court if you wait a little longer than the due date. There are several steps involved in collecting a debt, and those are generally set by state law.

There is also a difference between debts owed by your customers and business to business debt. You still need to get paid regardless of which one it is but realize the rules are different.  If you have a lot of debts that you have not collected, it can sink your small business. This is why it is a good idea to get a lawyer involved not too long after the due date.

Business experts recommend putting a due date on all bills. They also recommend having a set procedure for billing, and that you have this posted at the business. This can help remind customers and businesses you do business with, and it can help you in court as long as you follow your own policies.

The most basic action a lawyer can take on your behalf is to write a letter threatening legal action. Most people, and most businesses, do not want to go to the expense of a trial, and people will often pay their bills after getting a threatening letter from a lawyer. A good business lawyer can write a letter for you, and often that will result in bills being paid. When they are not paid, you need to get your business lawyer involved even more.

Sometimes the person says they want to pay but may not have the full amount. Sometimes when it is a business, they may want to argue about the amount due. After the letter from an attorney, the next step may be to negotiate a settlement. Your business lawyer can negotiate a settlement that is satisfactory for both parties.

A good lawyer can also help you keep the business relationship going, and settle the matter in a positive manner. Business to business debt is often for a larger amount than it is for regular customers. This may make getting a lawyer involved more important, and it may make negotiations more important as well.

Sometimes businesses use collection agencies to collect relatively small debts that customers owe. There are good and bad sides to this approach, and it often alienates customers. Often a simple letter to the customer from your attorney will get the wheels in motion. if the customer contacts you there is a possibility of working something out and everyone will be happy.

When it is another business, it is generally a larger amount, and this can hurt your business in a bad way.  You may need to keep that relationship open, so it is important to maintain the relationship if at all possible. A good business attorney can negotiate a settlement that will leave everyone satisfied and keep the relationship in good standing.

When letters and negotiations do not work, you will have to go to court to collect your debts.  You will have to go to civil court to try to get a judgment, which is different than going to criminal court. At this court, the judge may rule n your favor and order payment to be made. Even then you may still need your attorney to follow up as sometimes people do not pay debts even after being told to pay by a court.

Further action could include liens on property, garnishment, and a writ of execution. The writ of execution is an extreme measure that would allow you to seize assets including bank accounts. This would have to be for a very large debt and would take a lot of time in court to accomplish.

Sometimes businesses will have trouble paying debts and may try to file bankruptcy. This complicates the process, but your business attorney can still help negotiate a settlement even in that scenario. The greater danger would be that the business simply shuts down and ceases operations. In that case, it becomes very hard to collect a debt.

There is also a statute of limitations in some states, meaning that once a debt is so old it cannot be collected legally.  That is usually for several years. Even then there are some ways to try to collect, but the more time that passes, the harder it is to collect a debt.

Some people are comfortable reminding people of debts owed, but eventually, you may need the help of a lawyer. If you are having trouble collecting debts, whether from individuals or businesses, contact a business attorney, and get help. it could be as simple as getting the attorney to write a letter for you asking for payment.