Factors to Consider with North Carolina Debt Collection Lawsuits

If you are a business owner in North Carolina that extends credit to customers, it is likely that you will encounter situations where you need to collect a debt at some point. Despite being clear on your terms for accounts and having a signed contract, some customers will not pay up when the amount is due. Fortunately, you have access to numerous options for debt collection, including a lawsuit if necessary. Plus, you are not bound by the Fair Debt Collection Practices Act (FDCPA) when taking action against a debtor. This federal statute only applies to companies in the business of debt collection, and only when they are seeking payment on consumer debts.

Because you are not subject to the FDCPA prohibitions, you have many more options for collecting debt from customers. However, it is important to carefully consider strategy when doing so. There are multiple steps along the way as you set the stage for filing a lawsuit, and you may even be able to avoid suing in some cases. A Monroe, NC civil litigation lawyer will protect your interests throughout the process, but there are some factors to review with debt collection lawsuits.

Adding Litigation to the Debt Collection Process:

Some businesses develop a documented process for collecting debts, without including the final step of filing a lawsuit. Litigation should be part of your program, and you need to communicate it to your customers. They have no incentive to pay when there is no threat of legal ramifications. As you add litigation to the process, keep in mind that it can still take up to a year or more to get a judgment.

Assessing Value of a Claim:

When considering debt collection litigation, it is crucial to do a thorough analysis of the value to your company. The unpaid invoice is just one number to assess, but keep in mind:

  • The likelihood of actually collecting the debt;
  • The amount you will need to invest to collect it; and,
  • Prioritizing debts that you want to pursue first.

Small Claims in North Carolina:

Depending on your business, many of the unpaid accounts you face could qualify as a small claim. Under court rules, small claims courts handle disputes in which less than $10,000 of cash, property, or other value is at stake. A key benefit is that the litigation process is simplified, including the exchange of discovery between the parties. Many times, a trial in the case will be scheduled within a month of filing the lawsuit.

Considerations for Lawsuits:

There are additional details to take into account with debt collection litigation:

  • Depending on your findings when assessing the full, realistic value of the claim, settlement may be appropriate. There are situations in which taking less than what is owed is a better outcome than going to court.
  • You should carefully consider how your approach to debt collection could affect your company’s reputation. It is critical to create the impression that you take unpaid invoices seriously, but you are also willing to consider out-of-court solutions.
  • When you do file a lawsuit and go through litigation, the final result is a verdict in your favor. However, you must still enforce the judgment to get your funds. Options include wage garnishment, attaching bank accounts, and liens on property. If you expect challenges with enforcing the judgment, litigation may not be productive.

Retaining an Attorney Instead of a Collection Agency:

Hiring a collection agency may be an option for recovering unpaid accounts, but you can also work with a lawyer for debt collection litigation. The biggest downside with a collection agency is the impacts on your company reputation. You might not agree with their tactics and treatment of debtors, even if they are successful.

When you retain a lawyer for help, you can consult together about objectives and steps in the debt collection process. Your attorney will assist with evaluating the claim, determining priorities, and negotiating settlement on favorable terms. If necessary, a lawyer can take your case to court, whereas a debt collection agency may not.

Consult with a North Carolina Civil Litigation Attorney for Details

These are important factors to consider when you are weighing your options for debt collection, but it is wise to retain skilled legal counsel to advise you. To learn how our team can help, please contact Plyler, Long & Corigliano, LLP by calling 704-741-5804 or visiting us online. We can set up a consultation with a Union County civil litigation lawyer who will provide personalized details about your case.