Frequently Asked Questions
- How do I minimize my outstanding accounts receivable and maximize collectibility even before retaining an attorney?
- How much will having you collect this debt cost?
- How long have you been representing clients collecting debt in New Jersey?
- Can I add legal fees and costs to the amount you are collecting?
- Do I need to go to court?
- What can I do to help the process?
Clients frequently ask: How do I minimize my outstanding accounts receivable and maximize collectibility even before retaining an attorney? Here are a few common-sense suggestions:
Establish a written credit policy with your customers.
Implement a policy and use it for every account.
Know your customers.
Do you know if your client is a corporation, Limited Liability Company or simply a sole proprietor using a trading name? It is not uncommon for corporations to use trading names instead of their corporate names. It is important to clearly establish who is responsible for the obligation especially when litigation and forced collection becomes necessary.
Minimize your expenses and maximize your potential recovery. Clients should assume that even their best customers can fall upon difficult financial circumstances. It is a simple fact of life and happens it happens every day in business. You must recognize and plan for these contingencies.
Here are a few simple suggestions:
- 1. Credit Application/Agreement
Have your clients complete and sign a credit agreement which includes:
- Provisions for interest on late payments;
- Securing an agreement for the payment of attorney's fees and costs of collection;
- A personal guarantee for all credit extended, when appropriate.
At a minimum, all of the items listed above should be contained within your credit application. If not, you should have it reviewed by an attorney knowledgeable in this field.
- 2. Using forbearance agreements and security agreements when appropriate.
Often Security Agreements can be utilized to create a lien on the equipment or merchandise sold to protect you in the event of a default.
If an account is already delinquent, forbearance and security agreements can be structured to re-establish credit with your customers to help them continue to pay you by staying in business as well as provide for a liquidation schedule for payment of that debt in lieu of suit.
By convincing a client in default to execute these types of agreements can help minimize the "manufactured" defenses which often arise when litigation becomes necessary.
- 3. Document and maintain a file on each client.
It is not uncommon for customers to send letters inadvertently admitting liability on an account. This is perhaps one of the best ways to forestall the "manufactured" defenses when you are forced to file a lawsuit.
Accordingly each statement sent to your customers and each document or letter exchanged should be maintained in your client file. Any agreements or discussions had with clients on the telephone concerning a particular subject should be documented with a confirming letter and/or memo to the file when appropriate.
- 4. Always remember: "The squeaky wheel gets the grease."
If a customer falls behind, press them for an explanation. If you can't get a straight answer with a commitment to address the delinquency, you should consider moving forward with legal action. Moving forward promptly can help maximize your prospects for recovery, especially when your customer appears to be struggling to meet his obligations.
Irrespective of the nature of your relationship, a customer who avoids communication is most assuredly attempting to avoid his obligation to you. Don't fall victim to the customer who continually promises and consistently fails to fulfill his obligations.
How much will having you collect this debt cost?
The filing fees vary based upon the amount of the claim. Generally speaking, matters for less than $15,000 require a cost of $175. Matters that exceed $15,00.00 require an outlay of costs of $500.00.
How long have you been representing clients collecting debt in New Jersey?
Since 1994
Can I add legal fees and costs to the amount you are collecting?
Yes, if you have a contract on credit application which provides for reimbursement of those fees and costs if litigation becomes necessary.
Do I need to go to court?
Rarely. You only need to appear in court if the claim is contested. Most claims are not contested. Accordingly most matters proceed without a court appearance.
What can I do to help the process?
Keep good copies of debtors checks, letters, and email communications. This information can help forestall a defense or otherwise provide asset information.