Most of us take out credit when times are good—and often then too because that is the only time lenders want to give loans. Personally, you may already have credit cards, mortgage loans, car loans, and more. And if you own a business, you probably have another set of credit cards and some loans as well.
As with personal debt, some amount of business debt is good, and often necessary. You may need credit for a multitude of items, allowing for easier accounting of gas for company cars, ordering of supplies, inventory, and more. Larger loans may have allowed you to expand, buy new technology, work on bigger marketing campaigns, and more. Unfortunately, issues other than money mismanagement often come into play and have the potential to do serious damage to our finances. Both your personal and business credit may have been affected if you have been in a serious accident or suffering from an illness and unable to work. Other factors may come into play too such as a downturn in the economy or the niche in which you work, affecting your income—and your ability to pay creditors—significantly.
If you are having trouble paying business debts, the invoices are probably starting to pile up with those dreaded red ‘delinquent’ stamps on them. And while the rules are more relaxed for commercial collections (in comparison to more protective laws for consumers), allowing them more latitude in hounding you, most companies are still hoping to preserve a good working relationship at first, hoping they will continue to have your business.
Once your debts become seriously delinquent though and they have cut off all lines of credit, you may find that the relationship changes significantly—and if the bills are not paid, you may find a process server at your door delivering a summons and complaint that outline how much you owe—and how much time you will have to respond. Usually you have 20 to 30 days, and it is very important that you do so with the help of an experienced attorney.
Without a response to the lawsuit, you may find that the creditor is granted a judgment against you—and quickly. Once that has happened, the creditor is imbued with even more power as the debt is now considered secured. You have several options, and a consultation with a business attorney is more important than ever at this point to avoid serious repercussions. Your attorney may consider filing a motion to vacate if you have a good excuse for not responding, such as an illness, work obligations, or other reasons. If the motion to vacate is granted, they can then go on to argue the case. You may also consider just paying off the debt or negotiating a settlement with the attorney. As a last option, you may be eligible to file for Chapter 7 or Chapter 13 bankruptcy to have the debt discharged or rolled into a repayment plan.
Dealing with any court or default judgment is extremely important as the creditor has the power to seize assets, freeze bank accounts, and even garnish wages. Unless you are judgment proof somehow with no current income and nothing left to lose, this is a serious issue that should be given priority.
Do you have questions about a judgment or another business matter? If so, contact Attorney Shane Coons. Our law office represents clients involved in a wide range of businesses and legal issues, and we would be glad to review your case and help you explore your options.
Call now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com.