Non-Payment of Invoice Law
One of the biggest concerns for business owners is getting paid on time. Any operation depends on its accounts receivable; therefore, it can be disastrous when that faucet shuts off or slows down.
To ensure your business can survive, you must know what you can do legally to get paid for unpaid invoices. Here is some basic information about how the legal system can help you recover your money.
Assess the extent of your damages and your chances of recovery.
You must decide whether seeking legal action before starting the legal procedure to collect a debt is worthwhile. Is it worth the cost of litigation? You must consider your damages and the customer’s ability to pay as you make this choice.
If the consumer was renting or purchasing products or equipment, you should also consider whether they were harmed in any way when calculating damages. If so, you can account for the expense of repairs and additional losses brought on by the loss of potential rental income.
The customer’s financial situation is then examined by looking at their assets.
With assets such as vehicles, machinery, and other fixed assets; cash on hand; liquid inventories; real estate; corporate bonds and shares; notes receivable; and debts and obligations.
Instead of filing a lawsuit against a customer who doesn’t seem likely to pay you back or is about to file for bankruptcy, consider selling the debt to a collection agency and moving on.
Make a formal demand with an Attorney Letter Seeking Payment
If you file a lawsuit over unpaid invoices, you start the procedure by sending a formal demand letter to the defendant, who may be a person, a company, or both. You have the right to make a demand against both the defendant (a company) and the person who signed the defendant’s personal guarantee (a person).
Your demand letter should include, among other things, a description of the customer’s default, the amount still owed, a demand that all past-due payments be made by a specific date, and a warning that legal action may be taken.
Bring a lawsuit and ask for relief before the judgment
The next step is submitting a complaint and serving it in the appropriate court. Most of the time, this happens in the county where the transactions took place or where the defendant lives or does business.
There are options to request a remedy right away after filing a complaint. To put a lien on some of the defendant’s assets or to seize them, for instance, you could apply for a collateral agreement. This can pressure the defendant to settle the lawsuit and protect your ability to get paid if you win.
During the pre-trial stage of a case, you can use the discovery process to find evidence to back up your claims and find out where a defendant’s assets are. This can help you later when it comes time to enforce a judgment.
Getting a Judgment
A judgment by default (when the defendant does not respond to the complaint or show up in court), a judgment based on a motion, or a verdict following a trial As soon as a decision is secured, enforcing it can begin. Each jurisdiction provides a variety of methods for enforcing judgments, including:
Writs of execution, abstracts of judgment, and judgment liens can be used to direct a sheriff to seize equipment or garnish cash assets held by the defendant. As you try to get your judgment enforced, keep in mind that your judgment may also include interest, attorney’s fees, and court costs in many places.
The following step is to learn more about collection issues.
When determining whether to file a lawsuit over unpaid invoices, many considerations can eat up valuable time and money. Talking to a lawyer can make things easier for your business and help you get your money back smartly. To learn more, contact a collection lawyer in your area right away.