Uncollected commercial debts can have a serious adverse impact on your business. In some instances, it may be possible to write a demand letter that results in productive negotiations and a plan to get the debt paid. In other cases, it becomes necessary for a creditor to file suit against debtors that refuse to pay. The commercial collections lawyers at Klapper & Fass use aggressive litigation tactics to help creditors in New York and beyond pursue the funds that they are owed.Filing a Commercial Debt Collection Lawsuit
Many commercial debt actions arise out of contracts. In addition to contract claims, you may also have claims based on checks returned because of insufficient funds. New York has adopted the Uniform Commercial Code (U.C.C.) for most commercial accounts that involve the sale of goods or services valued at more than $500.
The contract for the goods or services usually identifies the parties to a transaction and states the nature of the transaction. The first step in collecting the debt and filing a collection lawsuit is to locate the debtor. If the debtor is no longer at the location indicated on the contract, it may be necessary to conduct an investigation to locate the debtor. , It may also be necessary to conduct research about the debtor's assets to make sure that it is possible to collect the debt once a judgment is secured.
Debts arising out of a contract can be secured or unsecured. Secured debts, which permit a creditor to take the collateral securing the debt upon the debtor’s default are enforceable under Article 9 of the U.C.C. The creditor can repossess the collateral by the initiation of judicial foreclosure proceedings, known as replevin or sequestration. Once the creditor has possession of the collateral, it can sell the collateral subject to the provisions of U.C.C. Article 9. If the sale of the collateral does not cover the amount of the debt, you can pursue a deficiency lawsuit to recover the remainder. Prior to a judgment of foreclosure, in New York, a creditor can obtain an order of seizure whereby the collateral is placed in the hands of a sheriff, pending the outcome of the litigation.
The length of time it takes to collect an unsecured commercial debt varies depending on the debtor's actions. Often, a debtor does not respond to demand letters, a creditor will need to file and serve a civil complaint. If the debtor does not answer the complaint, a default judgment may be taken against it. However, if a debtor does answer the complaint and asserts viable defenses, litigation can become much more expensive, and it can take a significant amount of time just to obtain a judgment.
Common defenses include that payment was already made, that the goods were defective or non-conforming or not timely delivered, that the services were not satisfactory, that there is a lack of standing to sue, that there is a lack of jurisdiction, or that there was improper service.
Obtaining a judgment in the lawsuit rarely results in a judgment being satisfied voluntarily. The judgment should be recorded in the county where the debtor holds property with sufficient value that is available for execution. Sometimes, judgment debtors make fraudulent conveyances in order to avoid paying a judgment. We can help you litigate that issue.Consult an Experienced New York Attorney When Pursuing a Commercial Debt
The collections litigation attorneys at Klapper & Fass have extensive experience settling debts for clients in New York and elsewhere in the United States. We work to obtain payment for debts without bringing a lawsuit when possible, but we are also skilled litigators who can file collections actions as needed and take steps to enforce judgments. In addition to our statewide and nationwide work, we serve clients from local areas including the five boroughs of New York City, as well as Rockland, Suffolk, and Nassau Counties. Contact us at 914-287-6466 or via our online form.