Things to consider prior to taking a legal action to recover company debts

When conventional credit-control procedures are exhausted and you are convinced you are in the right, you ultimately face a choice. You can call it a day and write off the overdue amount as a bad debt or you can take legal action to enforce the payment that should be yours. If you have made up your mind to go with the latter, there are some crucial points that you should consider before commencing legal proceedings. Among them are the following:

Can the customer pay?

If the customer, in fact, has got no means to pay, as opposed to choosing not to do so, there is little point in taking legal action. You will become the judgment creditor but still not get paid and will have incurred legal expenses as well.

Legal costs

Legal costs will inevitably be incurred if an action is taken. You may succeed in recovering some of them from the customer, but what if the customer is not able to pay you anything at all?

The chances of success

The chances are probably very good if success means you winning the case and getting a judgment. An overwhelming majority of actions are successful if measured by this yardstick. This is because in most cases there is no real dispute and the case is undefended. Everyone knows that the money is owed; it is just that the customer will not pay. However, if success means actually getting paid, the chances of success are less.

An understanding of the legal system

It is important to understand that the legal system is there for you to use. It can provide a forum in which you can make things happen, but it will not make things happen for you. There are a lot of policies and guidelines to be followed which you may find frustrating — especially if you are handling a foreign judgment.

Even though you are in the right, and even after you have won your case and got the judgment in your favor, the legal system will not act on your behalf. You must fill in the forms, pay the fees (which you will hope to recover from the defendant) and be proactive every step of the way. Or, alternatively, you can hire a debt collection attorney and let him/her do all the work that will help you get you paid.

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Created on Nov 14th 2018 01:58. Viewed 470 times.

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