Awarding credit is a fundamental facet of American finance and worldwide business. It helps nascent companies get off the ground by providing vital capital, which in turn allows the economy to grow and business opportunities to be created. There is, however, another side to credit funding. The very nature of an individual or a company creating debt to obtain needed capital creates short and long term problems. While companies hope that their business plan is solid and promising enough to achieve cash flow and growth while allowing for repayment of their debts, the fact is that sometimes credit-driven investments do not create projected returns, making for a potentially unpleasant situation for borrowers and lenders alike. When debtors fail to repay debt as promised, more often than not the creditor will have multiple remedies under state and federal law.
During a prolonged economic recession such as the one we are now experiencing, there is a noted increase in both the frequency and promptness of debt collection. As lending companies are themselves not immune to the current recession, timely recovery of past due sums is becoming an increasingly critical consideration. Following a default, lenders should pursue reimbursement within whatever timeframe is appropriate under then relevant circumstances. Regardless of whether or not your decision comes at an inconvenient time for the indebted party, the fact remains that a lender has rights that permit prompt recovery to effectively carry out their business.
In order to properly ensure that delinquent sums due are eventually received, two useful allies are reputable debt collectors/debt collection agencies and attorneys with experience in credit/debt resolution, bankruptcy, or related areas. The two will often work in collaboration, as legal enforcement may be necessary to bring about prompt settlement. It is recommended that the debt collector you retain be local to the area where your debtor is located, as often times localized nuances of business procedures, federal, state, and city statutes, etc. can limit the effectiveness of collectors based elsewhere who are likely to be less familiar with these statutory obligations. Your attorney should be licensed in the state of the debtor.
Significantly, one must address missed payments promptly, and give careful consideration to elevating your collection efforts by turning to legal and financial professionals. Many of the rules and laws at work in the field of credit lending are highly complex, greatly increasing the possibility of errors without third party assistance. Following default, the longer you wait to take action, the more complicated the collection process can become while lowering the prognosis for successful recovery. While not all delinquent payments are the result of intentional nonpayment, the majority of them are, calling for prompt action to avoid “stale claims.” Generally, if you feel as though legal action is the next necessary step, this is very likely the case.
By Alexander Newgard, Administrative Clerk, The Nacol Law Firm PC
