Who owes what and when can dictate how to pursue unpaid debts

Who owes what and when can dictate how to pursue unpaid debts

| Dec 15, 2020 | Collections

Collecting past-due payments from commercial clients in California can be frustrating. While there are many different options by which a creditor can seek payment, the right choice depends on the details of the individual situation. When it comes to effective commercial debt collection solutions, a unique approach is crucial.

And these are certainly unique times in which we are living and doing business. Collecting commercial debt is complex enough with intricate laws and technically challenging options, but an ongoing public health crisis only makes it more complicated.

Avoiding costly litigation

Commercial real estate relationships are particularly vexing. It is in a landlord’s economic interests to retain tenants. Late rent is better than a vacancy. Moreover, suing a business that is insolvent or in bankruptcy can expose your lease to a judge’s discretion and public scrutiny. Maintaining open communication with a tenant in default can retain options and control.

For commercial debts, there are often multiple interested parties trying to collect on several different debts at once. It requires skill and experience to identify the best way to secure payment. In some cases, an amicable and out-of-court resolution is possible. This is the first and preferred approach as it is faster and easier than litigation or other options.

Understanding how to effectively collect from commercial clients requires asset-liability analysis, legal research and an in-depth understanding of how the different collection processes work. An analysis of the individual case is necessary to identify the approach that will give the creditor the highest chance of success. It also requires constructing a plan that is practical and can be implemented promptly.

Assessing the situation and options

Commercial debt collection is a complex process, and legal skill is an essential part of success. It is important to work with an attorney who can implement whatever steps are necessary to give the client a chance of successfully resolving the debt and recouping financial losses. A California business that needs to collect on past-due balances will benefit from first seeking an assessment of their situation and an explanation of the legal options available.