A common type of lawsuit faced by businesses regards money owed from one entity to another. These are often contract disputes where one party believes the terms of the contract were not honored and so withholds payment. Others are simple collections lawsuits where one party is owed money and the other chooses not to pay or believes they cannot pay.
Handling a Collections Lawsuit
A collections lawsuit can be a negotiating tactic to encourage a party to pay quickly. However, in the event of a large non-payment, it is also a way to show due diligence on collecting a debt. Businesses facing collections lawsuits from creditors, suppliers, and others can often negotiate revised contract terms that allow for new payment plans, reduced payment, or cash settlements for less than full value. Handling both the negotiation and litigation requires a clear view of the end goal and an understanding of the strengths and weaknesses of the particular case.
Particularly if the lawsuit has grown from a contract dispute, preserving business evidence may be key to the outcome. Clear records that show the original deal, the intent of the deal makers, and how the elements of that agreement were being met. Keeping good records of work done, inventory received and paid for, and other elements of your business is important.
If your business is facing a collections lawsuit, the first step is to consult an experienced business litigation attorney. They will advise you on preserving evidence, responding to the lawsuit, and taking steps to try to negotiate a resolution. Collecting the documentation to illustrate your position is going to be the first step you need to do. This allows your attorney to make accurate representations in your response to the lawsuit and respond to discovery requested in a timely fashion. Further, good records put you in a strong position to reach the correct solution quickly.
Effect of a Collections Lawsuit
If the lawsuit results in a judgment, then the party at fault becomes obligated to pay the amount due. If for some reason they cannot pay that amount, then the winning party has the right to place a judgment lien on assets of the business. This lien makes it difficult for them to sell the business, sell real or personal property the business owes, and gives the victor a clear showing of debt owed in the event of a bankruptcy proceeding.
Because our litigation work focuses primarily on business issues, our lawyers are familiar with collections and contract lawsuits and will work with you to determine the best and quickest solution to your concerns. To learn more, reach out to the Dunn Law Firm by calling (435) 628-5405 and set up a free consultation today.