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collection law faq

Q. How long after a debt becomes delinquent should I seek the help of a collection agency or collections attorney?

A. You should seek the assistance of a collection attorney as soon as possible after an account becomes delinquent to ensure that your contact and asset information remain current and to enable the quickest collection of your money.

Q. What's the difference between a collection agency and a collections law firm?

A. The main difference between a collection agency and a collection law firm is that a law firm has the ability to use the court system to force the debtor to pay. Collection law firms are able to obtain judgment against a debtor and pursue collection of that judgment by the use of the legal system's various remedies.

Q. Is there a statute of limitations on a debt owed to my business?

A. Yes. The statute of limitation depends on the state where the debt is owed and the type of debt owed. Contact your attorney for statute of limitation information on your particular debt.

Q. Should my business simply write-off small debts owed us and only focus on the larger ones?

A. Small debts should be placed for collection along with large debts. Smaller debts are often collected by telephone calls and letters because it is not cost effective to use the court process on small debts. However, a collections law firm can collect small debts owed by the same debtor to the same creditor economically by combining the accounts and using the judicial process.

Q. What are some simple things my business can do to reduce the amount of bad debt we are saddled with?

A. The easiest way to decrease your amount of delinquent receivables is to get good information from each debtor prior to delivering any goods or services. Important information to obtain in advance are the debtor's: name, address, home phone, work phone, social security number, bank, and employer name and employer address. Another easy way to reduce your amount of delinquent accounts receivable is to always obtain a personal guarantee when dealing with a business entity.

Q. If someone who owes me money declares bankruptcy, am I automatically out of luck or are there other options?

A. You are not necessarily out of luck when a debtor files bankruptcy, but you should immediately stop all contact with the debtor and seek the advice of your attorney. There are some circumstances under which you may still collect your debt, but you will likely require a complete review of all of the relevant facts by your attorney to determine collectibility.

Q. Can I recover for the time and money my business spends collecting on delinquent accounts?

A. In Virginia and Maryland you may be able to collect attorney fees and collection fees which are allowed by contract. However, the West Virginia Consumer Credit and Protection Act strictly prohibits collection of attorney fees and collection fees.


Copyright 2010 Martin & Seibert, L.C.