Last month, we talked about the importance of debt collection to the stability of many small-business owners. We pointed out that a lawyer should draft precise contracts for both customer and business-to-business transactions. Clear contractual provisions that specify when debts are due, methods of payment and how defaults will be handled puts the family business owner in a position of strength when debt collection becomes necessary.
Informal resolution of a delinquent bill can sometimes be a good approach. For example, the debtor may be an important supplier or regular customer, and the relationship may be worth preserving by trying to resolve the problem through negotiation, rather than immediate legal action. The business owner may decide to settle the debt by taking less than owed to save the relationship or cut losses.
Options for debt satisfaction: a lawsuit
Should informal resolution fail, the business owner should consult a lawyer about legal options to collect the debt.
As we have discussed before, if the debt is secured such as by a piece of equipment or real estate, the business owner could demand the collateral be signed over to him or her. If the debtor will not do so, legal action could be taken to foreclose on or repossess the item.
For a debt that is unsecured (or undersecured) one option is to file a lawsuit. Sometimes when a suit is filed, the parties can negotiate a settlement of the money owed. Otherwise, if the plaintiff wins the case and secures a judgment, the creditor can take steps to execute the judgment, meaning having the defendant’s property sold to pay the amount due.
We will continue to discuss creditor’s remedies in future posts.
In Albuquerque and throughout New Mexico, the law firm of Giddens & Gatton Law,amp; Jacobus has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to bankruptcy and its alternatives.
We represent many debtors and creditors in Albuquerque, Santa Fe, Las Cruces, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law,amp; P.C., at 505-273-3720 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law,amp; P.C., is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.