Debt collection is serious, time-consuming, and complex work. If the case is not settled and moves to litigation, you will have to pay additional expenses, a higher contingency rate, and added stress and frustration. It is best to resolve the matter before it escalates.
Below are some things you should know before you sue a client. You should contact Zero Debt Law Firm before suing a client for a debt case.
Things to know before you sue a client
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From traditional to alternative
When the term debt collection comes, most of us think that the only course of action is litigation. There are several other options that are equally effective in taking a client to court.
Another option is to send the client a stern letter from a lawyer, threatening to go to court for the unpaid debt. Occasionally this is enough to negotiate with the debt holders for settlement. This option provides good results in a fraction of the time and allows you to get back to your work faster.
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Understanding the settlements
Settlements are an alternative to suing clients, allowing them to reduce contingency fees and out-of-pocket costs and receive a fixed amount of compensation efficiently and quickly. Settlement is a good option when the indebted business is going bankrupt or closing its doors.
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Voluntary payment plan
The second option is the voluntary payment plan. The debtor pays their outstanding debt in an increased amount, allowing the business to gather their money without adding the cost of litigation and faster than suing and getting a judgment.
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Quite a long time
You should be aware of how long the litigation process takes.
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Default judgment
In a default judgment, the debtor does not fight the lawsuit, which takes four to six months to receive. Sometimes, it may also take nine months or longer.
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Defended lawsuit
This lawsuit usually takes nine to twelve months or even longer to attain a trial date. Debtors often spend thousands of dollars to defend the case to get the extra time before the day of reckoning.
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The delay game
Debtors will tell their lawyers to postpone the trial and make it as long as possible. It is unfair to the creditor, but it is a widely accepted technique that can carry out over a year or more.
No doubt, it is tempting to turn to the option of suing a client to collect the unpaid balance, but the way we visualize how the legal system works is not even close to reality.
