Using the discovery process to uncover financial misconduct

Using the discovery process to uncover financial misconduct

On Behalf of | Oct 12, 2023 | Firm News

Some people take on debt intentionally by applying for a personal loan or credit card. Others end up with unintentional debt due to unexpected incidents, like a medical emergency. The average person who owes a substantial amount of money to other individuals or a business does their best to make good on their obligations regardless of the origins of their liability. They may work out payment arrangements, borrow money from elsewhere and try their best to fulfill their obligations.


Of course, there are exceptions to that rule. Some people will do whatever they can to avoid financial responsibility for their debts, even if they incurred them intentionally. They might try to work jobs that pay in cash, change their phone numbers and return letters to creditors unopened. Those seeking to avoid financial responsibility for personal debts may also try to obfuscate their circumstances so that creditors don’t make use of the systems available to them. A lawsuit filed against a debtor is potentially one way for a creditor to gain access to certain information that can be potentially useful in the collection of a debt.


Litigation can generate the right of discovery: individuals trying to avoid collection efforts might lie about their employment status, personal assets and financial obligations when communicating with collection agents. It can be quite challenging for creditors to access accurate information in such scenarios.


That can all change when a creditor takes a debtor to civil court. During a legal conflict between two parties, it may be necessary to review certain documentation. The plaintiff and defendant may request certain records from one another, and the courts can potentially review all of that evidence. The right of discovery might help a business attempting to collect on a debt uncover previously undisclosed assets or obtain a more thorough understanding of someone’s current financial circumstances.


A creditor might discover that a person who has reported an income level too low to make wage garnishment a worthwhile endeavor actually has a second job. Creditors could then use that new information after securing a judgment to speed up the debt collection process.


Many businesses, especially smaller companies, dealing with recalcitrant debtors may have a hard time navigating the legal process without legal support. Having professional guidance when attempting to collect on a sizable debt can help organizations avoid debt collection violations and potentially improve their odds of obtaining full repayment.