Don’t So

by Andrew Lajoie, Attorney for Kirton | McConkie Law Firm

Are you a business owner who is owed money? You may be discouraged from past collection efforts and may even think pursuing the debt is a lost cause. After all, if your only fallback has been to hire a collection agency to send form letters and leave automated voicemails, then it’s understandable why you’re discouraged. Fortunately, however, the law provides better tools to collect a debt, and when you know how to use those tools or have the assistance of knowledgeable counsel in using them, your chances of collection are much higher.

To enforce the debt, you need a judgment. An attorney can have a court of law enter a judgment for you or your business based on the amount owed plus interest and any potential attorney fees and costs. Once you have a judgment, you become a “judgment creditor,” which entitles you to enforce the judgment. Prior to entering a judgment, you are limited to only making demands. With a court judgment, however, you can start seizing the debtor’s assets pursuant to the rule of law.

Even if the debtor moves out of state, the process continues because a judgment entered in one state can be “domesticated” or “registered” in another state and enforced there. A good attorney can also help you track down debtors who have relocated.

Along with a judgment comes the authority to require the debtor to identify and locate their assets. Subpoenas can confirm or supplement this information when sent to banks that produce the debtor’s bank statements, which can then be analyzed to pursue the debt.

Sometimes a debtor may threaten to file for bankruptcy, which stays usual collection efforts. For their tactics to succeed, however, they must follow through and meet the court’s requirements. Even if the debtor does have a bankruptcy order, it doesn’t necessarily mean there are no assets to collect on. You may then have rights in the bankruptcy proceeding as a creditor entitled to liquidated assets distribution.

As far as collections go, an attorney can organize the repossession of equipment or other collateral that the loan is secured by. If the loan was unsecured, meaning there was no tangible asset securing the loan or credit, an attorney can garnish wages from the debtor’s employer, garnish the debtor’s bank accounts, or even seize any valuable qualified assets. These seized assets can then be sold in an auction arranged by the attorney on your behalf.

A common asset to pursue is the debtor’s home, which can have a lien placed on it and can often be sold. You can then use the proceeds to repay the judgment. Pursuing a debtor’s home can also motivate them to cooperate and establish a serious payment plan.

For those not currently pursuing a debt, an experienced attorney can be useful in ensuring your rights and preventing a situation where someone defaults on a contract or loan. An attorney can help you draft your contracts and agreements more effectively to prepare you to collect from a potential debtor. Debtors in the Arizona, Nevada, and Utah areas frequently move between these states and even go to California according to recent migration and relocation trends. Judgments can be enforced out of state, but it’s less work if you don’t have to file a judgment in a different state. Be sure to set the venue location and choice of law in your contract.

A creditor should also solicit detailed borrower identification information in the agreement, including a social security number, ID card information, home and work addresses, employer identification information, and existing bank information. Using universal form agreements found on the internet usually doesn’t sufficiently document detailed information about the borrower. Getting detailed information makes it easier for you to keep track of the debtor and to collect on any future monies owed. Any lack of information about a future debtor makes it difficult to enforce a judgment against them.

It's better if a default situation doesn’t happen in the first place, but when one does, there are ways to enforce your agreements and collect the debts you’re owed if you’re prepared.V

Andrew Lajoie is a local attorney in the Kirton McConkie St. George office, which serves clients in Nevada, Utah, and Arizona. Mr. Lajoie has considerable experience in representing creditors and debtors.

If you have questions about this article, please call (385) 501-5033 or email him at alajoie@kmclaw.com.