6 Situations When Your Company Needs a Debt Collection Attorney

Businesses count on their customers to pay what they owe so that the business can continue in operation. But what happens when your client or customer doesn't pay their invoice? Although no business owner or manager wants to be in this situation, it can happen to anyone at any time. And if it happens to you, one person you may need on your team is an experienced collections attorney. 

When is it time to call on an attorney for collections help? Here are six of the most common reasons.

1. Your Client Is Large

In general, the larger the nonpaying corporation or business, the more likely they are to have legal representation of their own. And that means their team of legal professionals will counter any moves you make to collect the debt. Do you have legal assistance on your side? 

Simply getting through the process of figuring out how to get paid can be more challenging with a large company as well. You and your attorney may need to find the right person or persons, find out what's holding up payment, provide backup documentation, or even deal with subsidiaries or parent companies. Having a lawyer on the case can cut through this red tape faster than expected. 

2. The Bill Is Significant

Probably the biggest concern that holds back companies from hiring a lawyer for unpaid bills is that they will have to pay more money for the service. This is true, so it's important to do a cost analysis to see when the reward outweighs the risk. 

The threshold for the minimum amount to be cost-effective when hiring a lawyer varies according to the costs you'll incur. An attorney already on retainer with your company may be less expensive than one who will bill only for this one action. And complex collections issues, such as accusations of a breach of contract, will cost more than a simple unpaid bill. Talk with your lawyer about cost expectations before deciding. 

3. You Can Negotiate the Debt

Can you and the nonpaying client negotiate over the debt? If you can collect on some or most of the debt, for whatever reason, it may be preferable to getting nothing at all. Give yourself the best chance at a positive outcome by working with an attorney to advise or handle the negotiations. This is especially important if heightened emotions may make smart negotiation hard for you. 

4. You Need to Draft Communications

What type of communications will you send to the customer requesting payment? If it's an established notification that follows guidelines previously determined by legal counsel, you might opt to use it without consulting an attorney again at this point. However, if you will write a new payment demand, you should work with an attorney to draft it. 

State and federal laws regarding debt collections often favor the person who borrowed money, so the creditor needs to be sure they dot all the Is and cross all their Ts. You may need to include specific wording, give notices at certain intervals of time, and follow a set progression of steps. Your attorney will know how to do so in ways that are both effective and legal.

5. The Case May End Up in Court

Do you believe the issue will wind up in court? A client in financial trouble might end up in bankruptcy court where you'll fight for your right as a creditor. One who argues that you haven't performed quality services may result in litigation. In either case, though, you will eventually need more legal help with the case.

The best time to start working with an attorney is early in the process so they have all the information and can help you take the fastest, least costly path to court. If you wait, you may end up paying them to help untangle a mess or return to complete the missing steps. 

6. It's a Blow to Your Business

Finally, in addition to the objective size of the unpaid debt, consider its impact on your business.

A large and healthy company can absorb quite a lot of small unpaid bills without interruption. But a small business might not be able to keep going if a single large client doesn't pay up. And without that income, could your ability to keep buying inventory or serving other customers be damaged? If so, the reputational hit to losing that money could be just as bad — or worse — than financial losses.

Where to Start



Are you facing any of these situations? If so, take positive action today by meeting with the team at Hart Law Offices, PC. We'll help you assess your options regarding an unpaid debt and find the right response to balance all your needs. Call today to make an appointment or get answers to your questions.