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To Sue or Not to Sue...

By John Debold © 2000


In collections, suit is sometimes a necessary remedy. But its not the only remedy and shouldn’t be the first.

Whenever possible you should try to avoid suit. Why avoid suit?

1. Because cost of litigation may not be practical.
2. Because a contested case may require a Plaintiff’s representative to appear in court.
3. Because a judgment may prove a hollow victory if the defendant has no assets.
4. Because (in some contested cases) it may trigger a counter-suit.

How to avoid suit?

Try to resolve any dispute that may be an honest block in the way of payment - It’s faster than court.

Negotiate. Even a small discount may be cheaper than court.

Offer special payment terms consistent with the debtor’s capacity to pay.

Get as much information as possible on new customers/patients on the chance that there is always the possibility of default.


When all else fails.

Your next move should be to call in a professional collection agency.

The collector has the training, experience, incentive and the technological tools to effect collection (most reputable collection agencies never charge a fee unless they collect.) He must move the debtor to a resolution in the quickest possible time for the collection to be profitable for his office (an attorney’s overhead usually makes it unprofitable to handle balances under $500.00 or to pursue disputes, or to monitor part payers).

The professional collectors (our partners combine almost 50 years of experience and continuous training) have heard every story and may even have a file on your debtor.

If the agency concludes that suit is the only alternative, you can be sure of their affiliation with the best attorneys specializing in the collection field.

If you feel our experience can help you preclude future bad debt problems, rest assured that you can always call your professional collector with your questions.

What You Should Know About Court Action

1.) In (New Jersey) matters we request costs which is
the average for processing district court cases from
"filing" through "judgment". Costs are listed on your
"Authorization Form"

In New York or Pennsylvania,as each jurisdiction
can vary, we request our attorney advise us before
we go forward.

2.) In the rare event of a contested case which goes to
trial, a witness may have to be provided.

3.) In the equally rare event of a counter-claim, additional
costs should also be anticipated to defend this separate
matter.

4.) In matters of judgments which must go on to execution,
supplementary proceedings, etc., additional cost must be
anticipated.

5.) In out of state matters, (other than NJ, NY, PA) court costs
are subject to the jurisdiction in which filed and the area
practice as to suit fees. You will be advised later as to
these costs and can accept or decline suit at that time.

6.) However, rest assured that most matters are resolved on
the terms shown on our "Authorization Form".

7.) The time table for the above cannot be predicted. The
many steps such as (a) service of summons (b) time to
answer summons (c) demand or levy by constable and
(d) supplementary proceedings, etc., are beyond our
control. As the attorney advises us we will forward
the status to you.

Debt Collection in the United States : A Brief Guide for the International Community

This is a fine article written by the International Lawyers Quarterly:

Click the webassets/ALQlogonb111111.jpg site HERE

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How to Collect a Money Judgment - State of New Jersey Brochure

When the lawsuit is necessary to collect your money

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Since these are difficult economic times, we’ve heard recently from clients who want to employ various degrees of compassion for consumer debtors.

While your debtor may not have the ready cash, or any cash to pay your bill immediately, a plan should nonetheless be forthcoming. If it is not and we hear nothing from your debtor, we must recommend a lawsuit to secure a Judgment (in District Court-NOT “Small Claims”) to protect your interest. More later on why we don’t, nor should you, use Small Claims court.

If they own a home, our court Judgment will have more weight than simply a credit bureau “derogatory.” It will be a lien against that particular parcel (or any they may own in the state the judgment was taken) should they sell or become deceased.

After a Judgment is awarded, the Court Officer will “Levy” Herewith an explanation.

Active Levy” – this is a court ordered levy that will always take assets away from the debtor. Usually these are assets that are cash (in a bank) or can easily be conveyed to cash, i.e. valuable artwork, collector car. Usually a judge will not order the sale of a debtor’s home to pay a debt, unless there are extenuating “fraud-type” or possible criminal circumstances. It can, in fact, happen for a debt, but it can be time consuming, unreliable and costly. Welfare benefits, Social Security benefits, SSI, Veterans' benefits or unemployment benefits cannot be levied upon.

Constructive Levy” – This is a “softer” levy. Assets are encumbered (liened) but are not sold. Your Judgment is a lien against, for instance an elderly debtor’s home and they will not have to pay during their lifetime (or until the home is sold, transferred, etc.). In New Jersey, for instance, the only item that can’t be levied is clothing.

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If we don’t know of a debtor’s assets: Our attorneys can file an “Information Subpoena” or [obtain an] “Order for Supplemental Subpoena” (Discovery) to ask as many questions of the debtor regarding his assets until he is satisfied. If these subpoenas are ignored, our attorneys (if the claim warrants) can issue a Warrant of Arrest.

“Small Claims Court”: We don’t recommend or use Small Claims Court for our clients’ collection suits as they may have problems for businesses. Other than the fact that SCC has the historical feeling of a consumer’s court, the judge must employ Rules of Evidence and Rules of Procedure, which you, as a business would not be familiar.

 Garnishment of a debtor’s wages (not in Pennsylvania): If place of business is known, or can be found, the Court Officer will be directed to the debtor’s employer to have funds deducted from his paycheck (provided he earns more than $127.50 per week in NJ).