You need to be able to collect the debts that are owed to you if you want to keep your business running. That’s easier said than done, as some of your clients may be unwilling to pay due to financial hardship or other obligations. Sometimes, though, there’s simply a complete unwillingness to pay up. What can you do in these situations?
When to pursue debt collection litigation
Most businesses hate to take their clients to court to recover the debt that’s owed. We understand the desire to retain your business relationships, which is why a lot of businesses forego debt collection litigation unless:
- The debt owed is significant.
- There’s solid documentation that the debt is owed and is past due.
- The debtor has the resources to pay you back.
- The debt is significantly overdue, typically by 90 days or more.
While you can try to collect the debt in an informal fashion while avoiding harassment, sometimes litigation is your last option.
How to prepare for debt collection litigation
Before moving forward with legal action, you should gather the evidence needed to support your claim. This includes:
- The invoices in question.
- Any written communication with the debtor.
- Any demand letters that you’ve sent.
Once you’ve initiated legal action, you could also secure the debtors financial records, giving insight into their ability to repay the debt in question. Together, this evidence should paint a clear picture of the debtor’s obligation and how they’ve fallen short of it.
Are you ready to move forward with business litigation?
Business litigation is oftentimes the only way to protect your interests. So, if you’re ready to take the legal action necessary to recoup what you’re owed, then please be sure to seek out the answers to any of your lingering questions so that you can confidently move forward with the process.
