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Strategies for Collecting a Commercial Debt

Steps to Take When a Client or Customer Fails to Pay

Commercial DebtWhen you run a small business, it’s almost inevitable that you’ll have to spend some time chasing payments from customers or clients. Here are some strategies to help improve your chances of collecting that commercial debt:

  • Notify the debtor as soon as payment is late—If you expect payment within 30 days, provide written notice of the delinquency on day 31. This will show your debtor that you intend to be proactive.
  • Notify the debtor more than once—Give the debtor an appropriate time to respond—a week is usually reasonable. If there’s no response, send another letter.

  • Follow up with a phone call—If you don’t get any response after two letters, call the debtor. Make certain you have the opportunity to talk to someone who is actually authorized to make payment. Be persistent in your calls, too. Get the person to make a commitment with respect to when a payment will be made. If that date passes without payment, call the debtor again.
  • File in Small Claims Court, if appropriate ($3,000.00 or less) —If the debtor is ignoring you, or has made multiple promises that have not been kept, it’s probably time to take legal action. If the dollar amount is less than $3,000.00, you can file an action in Small Claims Court, where you won’t need a lawyer and the paperwork is pretty straightforward. If you file the claim and the other party doesn’t show at the scheduled hearing, you can get a default judgment.
  • File a lawsuit in Superior Court—If the dollar amount is over $3,000.00, or if you want to improve your chances of success, hire an attorney to represent you in a formal proceeding in Superior Court. Chances are pretty good that the debtor will either settle before trial or fail to show, allowing you to get a default judgment.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide comprehensive counsel to individuals throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to see if you qualify for a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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