Installment Payment Plans

Commercial Collections Lawyers Assisting Clients in New York and Beyond

Debt collection litigation is very expensive and time-consuming, and it is important to retain lawyers who are not only skilled litigators, but also knowledgeable negotiators. In many cases, a debtor simply cannot pay a lump sum payment to a creditor but does have a good faith interest in resolving an outstanding debt. At Klapper & Fass, our commercial collections attorneys pursue debtors in New York and nationwide to resolve debts through negotiation when possible and save our clients the time and expense associated with commercial debt collection litigation. One method by which it may be possible to resolve debts short of litigation is by developing an installment payment plan.

Advantages of an Installment Payment Plan

The first few steps of commercial debt collection for creditors require locating the debtor and sending a demand letter. If the debtor responds to the demand letter related to an unsecured debt by stating a legitimate inability to pay the debt, we may propose that our client and the debtor enter into a written installment payment plan rather than jump immediately into litigation.

In some cases, a secured creditor may not wish to repossess the collateral that secures the debt and sell it because the trouble and expense of selling the collateral may not be greater than what the debt is worth. If there is a good chance a debtor will actually make payments through an installment payment plan, it may be wise to structure a plan that will result in receiving full payment, rather than litigating or repossessing collateral.

In the written installment payment plan, you can include a consent judgment clause, which is an important tool in debt collection. A consent judgment is a written provision in which the debtor agrees that if he or she defaults on an installment payment, the creditor can immediately take a judgment against him or her. The clause also agrees to a particular jurisdiction and venue, which can be especially helpful when the debtor lives and works out-of-state or in a foreign country. The consent judgment clause is helpful because it saves the creditor the cost of proving its case in exchange for taking rightful payments over a longer period of time.

A debt collection lawsuit in which the debt is contested can prove to be more expensive than the amount of the debt itself, so a consent judgment clause is beneficial to both parties. For example, a debtor may raise the defense that the services were non-conforming or that jurisdiction is improper. There may be complex factual issues that need to be worked out during litigation, and resolving these may cost more money than what the debt is worth. A consent judgment removes all doubt that the debt is owed.

Once the judgment is entered, an unsecured creditor effectively becomes a secured creditor. Judgment creditors have more rights in bankruptcy and in collecting debts. As a judgment creditor, you can satisfy the judgment by garnishing the debtor's bank account or wages. In some cases, you can place a lien against a debtor's real property, which will need to be paid before the debtor sells the property. A secured creditor also has more rights when a debtor enters bankruptcy.

Consult a New York Attorney When Litigating a Debt

Since commercial debt collection is so expensive, you should retain attorneys with significant experience not only in the courtroom, but also in negotiating to find creative cost-effective solutions to collections. At Klapper & Fass, our debt collection litigation lawyers try to negotiate with debtors in New York and throughout the U.S. to develop a workable installment payment plan. Our offices are located in Manhattan and White Plains, and we serve all five boroughs of New York City. We also assist clients in Dutchess, Westchester, Orange, Rockland, Nassau, and Suffolk Counties, as well as states across the nation such as California and Texas. Contact us at 914.287.6466 or via our online form.