Do you have inactive collection matters? Have your collection efforts been ineffective on a particular matter? If you answered "yes" to any of these questions, it is probably time to change course and embark upon a more pro-active approach. You have a number of alternatives available.
Alternative A. Retain an attorney:
You may retain an attorney to seek to collect the debt. By hiring an attorney, the attorney can seek to collect out of court. If that is not fruitful, then the attorney can file lawsuit in a Superior Court. Alternatively, under certain circumstances, the retained lawyer may, upon retention, elect to immediately file a lawsuit.
If you triumph in your suit against the debtor, the court ordered judgment will include:
1. The debt amount the court determines you are owed;
2. Interest (in amounts and rates permitted);
3. Court Filing Fees;
4. Service of Process costs;
5. Possibly other statutory costs; and/or
6. Possibly reasonable or statutory attorney's fees
Will the debtor owe your attorney's fees? Attorney's fees will not generally be part of the judgment unless you have a written agreement with an attorney’s fees clause, or you prevail on a “book account.”
Since the liability and amount of damages are uncontested in many collection matters, the debtor often does not file a Answer to Complaint. Therefore, the creditor (you) can obtain an uncontested default judgment. However, if the debtor elects to defend the lawsuit, your attorney’s fees may be greater.
Even after a judgment is obtained, the money still has to be collected from the judgment debtor. However, with a judgment in place, there are powerful post-judgment remedies available (wage garnishment, bank levy, etc.).
Alternative B. Small Claims Court:
You may file a small claims lawsuit. However, the maximum judgment amount you may obtain is $7,500.00. In small claims court, in most cases, no attorney may represent you. Rather, you represent yourself in court. You offer the evidence (documents and/or testimony) to prove that a contract exists, and that you are owed a certain sum of money.
Even if you obtain a small claims judgment, the defendant debtor may elect to appeal the decision which causes the entire matter will be heard a second time at the Superior Court. However, in a case where liability and the damage amount are undisputed, it is less likely that the judgment debtor will appeal the small claims ruling.
The small claims court will not collect the judgment for you. Rather, the court will issue orders (which you or an attorney prepare, file and serve on the defendant) to compel the defendant debtor to pay you.
Alternative C. File a Superior Court lawsuit yourself without a lawyer:
The law permits you to represent yourself. But, as the saying goes, "He who has himself for an attorney has a fool for a client." Nevertheless, some collection matters can be handled without an attorney by certain savy persons who can self learn the legal basics. Another option is to hire an lawyer a a legal coach to guide you through the process and, perhaps prepare some of the more technical documents. Legal coaches can be a cost-effective approach in some cases, though not necessarily as effective as full represenatation.
Alternative D. Write off the debt as a loss on your taxes:
You can choose to do nothing. You may confer with your tax professional to determine what manner of tax write-off you might be entitled to claim.
Alternative E. Bad Check Restitution.
Many California counties
Furthermore, you may seek to have the district attorney prosecute debtor who wrote the check without sufficient funds under Penal Code §470 or other sections. Some Courts or judges may require the debtor to pay restitution, that is, pay entire amount owed, in place of actual criminal prosecution and/or incarceration.
Note: There may be other alternatives beyond the ones mentioned in this article, which, under the right circumstances, might also be beneficial to you.
April 4, 2007Disclaimer
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