Wouldn’t it be great if everyone paid their debts in full and on time? Unfortunately, wishful thinking gets us nowhere when it comes to keeping a business in the black. What does move us forward is making wise decisions based on the best information available.
Knowing which debts are likely to be paid and therefore worth pursuing takes experience, knowledge and skill, and in some cases, persistence.
The first things to ask when pursuing a California debt
There are many types of debts and there are many ways to go about collecting. However, when you are considering whether to not to proceed, consider these three questions first:
- Can the debt be amicably resolved? In many instances, letting the debtor know that they can pay now without litigation is usually the best resolution for both parties. Knowing that litigation will happen should they fail to pay is often the motivation a debtor needs to resolve the issue.
- Will the company still be in business by the time the judgment collection process is started? Litigation is not instantaneous, but negotiation and a pre-litigation settlement can often be done rather quickly. In some instances, a negotiation for most or some of the debt owed is the most time- and cost-effective option.
- What are the obstacles to full collection? You should consider secured creditors, liens and judgments. These all create barriers to a quick debt recovery.
If the answers to these questions indicate that pursuit is warranted, then it’s time to move forward. People often have the misconception that debt collection entails crafting and sending a stern letter or series of letters. In fact, successful and lawful California debt collection is much more complex than that.
For debt collection to be most effective, one must have a solid grasp of all applicable state and federal laws and regulations. These include the Fair Debt Practices Act, California’s Rosenthal Act and the Fair Credit Reporting Act. A California consumer or commercial debt collection attorney can advise you of your rights and options when deciding whether or not to pursue collection and inform you of which remedy is likely to be most effective.