It happens to all of us. You provide exceptional service to a client but when it comes to getting paid, the check never arrives. After making several demands for payment to no avail, what are your options? You can either let it go or take the legal route to try to collect what is owed to you.
The process of collecting money is a fairly complicated. It can take as little as 30 days or as long as several years to collect. There are numerous factors to consider before filing a suit, such as:
- The amount of debt
- The type of debt
- The location of the debtor
- The likelihood of collectability
Before any suit is filed, it advisable to mail the debtor a simple demand letter. The letter should states the amount due, what the payment is for and if payment is not received within a certain amount of time, a lawsuit may be filed. There are several reasons for this letter. First, the debtor may pay right after receipt of the letter to avoid litigation. Second, the letter verifies the correct mailing address of the debtor. The correct address is necessary to properly serve the complaint if a lawsuit is filed.
If the demand letter fails, it is necessary to determine whether it makes financial sense to file a lawsuit. The cost to file a lawsuit in Cook County is around $340, plus a service fee for the Sheriff. Attorneys usually take collection cases under contingency basis, meaning that the attorney will not get paid until he or she recovers. The contingency varies but it is around 30% of the amount owed. So if the debt amount is fairly low, it may not make financial sense to litigate.
Once the complaint is filed, it has be served on the debtor. This may sound like a simple step but often times the debtor cannot be located and multiple attempts may be needed to obtain service. Sometimes the debtor is nowhere to be found and the case is dismissed for lack of service.
Once the debtor is served the case is set for trial. If the debtor does not show up a default judgment is entered in favor of the creditor. If the debtor shows up or hires an attorney, the case is litigated until trial. Either way, the goal is to get a judgment against the debtor.
So you have a judgment? Great! Now what? The attorney has to enforce or collect on the judgment. The first thing that the attorney should do is file a citation to discover assets. This “fishing expedition” allow the attorney to search for any assets of the debtor which include bank accounts, real estate property or collectibles of value that can be sold at an auction. If the debtor is employed, a wage garnishment can be issued. If the debtor has real estate property, a judgment lien can be attached to the property that can be satisfied from the proceeds once the property is sold.
What happens if the debtor has no assets and does not work? The judgment is then uncollectible. The creditor may try to issue another citation to discover assets in a couple of years to see if the debtor’s financial situation has improved that would allow recovery.
It is also possible to settle the case with the debtor by agreeing to take a lesser amount then is owed or enter into a payment plan.
This was a short overview of the collections process. For more information please contact Attorney Artur Zadrozny at 312-375-1704 or email@example.com