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My Customers Won't Pay Their Debts - Should I Sue?

My Customers Won't Pay Their Debts - Should I Sue?

As a business or personal lender, you have a right to be paid in full and in a timely manner for the loans or services you provide. As such, it can be both frustrating and financially damaging when customers fail to meet their end of the bargain and withhold payment. Seeking payment on a debt can be a time-consuming and exasperating process which can end up interfering with your ability to tackle more important matters – especially if the outstanding funds are necessary for you to cover your own debts.

If you have found yourself in a similar situation, you may be wondering what your options are or whether you should file a lawsuit. While filing a lawsuit can put enormous pressure on a debtor and cause them to take you more seriously, it is important you consider several different factors before moving towards litigation.

To help you find out if it is time to file a lawsuit, be sure to consider the following:

  1. Evaluate your options: While starting off strong by filing a lawsuit may result in quick payment, it is not always the most desirable or cordial option. In some cases, you may be able to secure payment if you take a more cooperative and polite route. Start off respectfully and escalate the collection process gradually, starting with letters, phone calls, possible payment restructuring, and, if necessary, and a discounted debt structure. It is imperative you adhere to legal debt collection practices outlined under the Fair Debt Collection Practices Act of 1978. If these methods go ignored, it may be time to take the more aggressive path.
  2. Weigh the costs of litigation: Depending on the amount of money owed, it may not make financial sense to pursue litigation against a debtor. In some cases, the costs of litigation may match or even outweigh your potential recovery. If the client has gone out of business or has seemingly vanished from the face of the earth, or you know that they will likely never be able to pay you anything now or in the foreseeable future, the wisest option may be to write off the debt. As the old adage goes, you cannot get blood out of a turnip – and you should not waste good money going after bad. Likewise, you must also weigh your willingness to take a customer to court over a past-due account.
  3. Consider out-of-court negotiations: In many cases, debt lawsuits can be avoided through arbitration or negotiations facilitated by an experienced attorney. Nobody wants to go to court, and many debtors are more inclined to settle the matter smoothly and peacefully through alternative dispute resolution. If these attempts are still unsuccessful, your attorney can help you move forward and pursue litigation and other court proceedings.

New York Business Collections Lawyers

If you have outstanding receivables which require collection action, contact Nisar & Mason, P.C. today. With more than two decades of collective legal experience, our skilled team of New York business collections lawyers can guide you towards a course of action that maximizes your chances of securing the payment you deserve. Whether your situation can be solved through out-of-court negotiations or requires more aggressive legal action, we have what it takes to protect your financial wellbeing and get the results you need.

Schedule your confidential consultation today to review your debt collection options.

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