Business collections can be relatively challenging. People who refuse to pay what they owe or adhere to agreed-upon repayment plans can leave business leaders in a difficult situation. Frequently, missed payments and payment plan defaults trigger direct collection efforts initially.
Companies call debtors repeatedly and send them notices advising them of the past-due balance, as well as any fees or interest the company has assessed. Most people try to resolve payment matters quickly, but others may not be quite so motivated.
It is sometimes necessary to initiate a collection-related lawsuit to secure repayment. Going to civil court can be a lengthy process, but it can be an investment worth making under certain circumstances. What solutions do the civil courts offer businesses pursuing debt-related lawsuits?
1. Wage garnishment
After the civil courts rule in favor of a creditor, the judgment they issue gives the creditor leverage to pursue enhanced collection efforts. Asking to garnish a debtor’s wages can be an effective way to compel repayment. A court order may allow the creditor to intercept a certain portion of the debtor’s wages until they pay what they owe in full.
2. Liens against assets
People are often protective of their most valuable resources. Creditors can potentially use vehicles, real property and other high-value assets as collateral for debtors’ financial obligations. A lien can prevent the debtor from selling an asset or transferring ownership of it to others without first repaying what they owe to the lienholder. In some cases, creditors can even seek to enforce liens. Liens can lead to foreclosure proceedings or may lead to asset liquidation.
3. Reversal of fraudulent transfers
People who recognize that they are at risk of aggressive collection activity may try to protect their assets preemptively by conducting fraudulent asset transfers. They may gift valuable property to family members or transfer resources to a trust. They may claim the goal is to protect their assets, but the transfer is a fraudulent attempt to avoid financial responsibility. Transfers made after taking on a debt or in the early stages of collection efforts may be subject to scrutiny by the courts during debt-related litigation.
Reviewing an amount owed and other details of a concerning situation with a skilled legal team can help business leaders evaluate their options for collecting on past-due debts. The civil courts may offer solutions for those dealing with debtors who do not want to fulfill their financial obligations.