Your debtor can be your best source of DISinformation. We can check whether the debtor owns any real estate or personal property, bank accounts, domain names, etc.
We can send a skilled and experienced constable to make demand and advise the debtor that he will "change the locks" if payment is not made immediately.
NEVER assume that:
If the debtor uses an out-of-state bank, nothing can be done to reach that money.
Many out-of-state banks have local branches and at times Massachusetts judges do in fact grant ex parte bank account attachments.
NEVER assume that:
Out-of-state debts are uncollectible
Wrong! Out-of-state debtors can be sued under MA's long arm statute or by local counsel. We have a network of experienced collection attorneys throughout the country.
NEVER assume that:
Collecting from a defunct entity is hopeless
Not always! You have nothing to lose by trying. There may be personal guarantees or claims of "successor liability", which can be pursued.
NEVER assume that:
Bankruptcy is the end of your collection efforts
While this is true in many cases, there are situations where priority claims are satisfied, or there are sales of debtor's assets out of which distributions are made.
Drafting Tips
Have your client/customer sign a written contract! (even a one-page document can insulate you from payment headaches).
Ask your client/customer to complete a credit application containing bank account information. (verify the information!)
Obtain a personal guaranty (if appropriate).
Know your client/customer! If a corporation or other business organization, inquire as to the place of organization and then check the state secretary's records. (many state databases are available on-line). Is the signatory authorized to sign? Is the "company" really a company? If not, who/what are they?
Before signing a document, read it carefully! Don't be afraid to negotiate. Have your lawyer explain any provisions you don't quite understand.
Provisions to include in your form contract:
Interest:
Be clear as to when payments are due. Specify the monthly interest rate on unpaid balances.
Collection Costs:
Put your client/customer on notice that they will be responsible for collection costs including reasonable attorneys fees.
Notice of default and opportunity to cure:
Require the client/customer to give notice of any dissatisfaction and provide you with an opportunity to remedy any problem.
Mediation provisions:
Mediation, as an alternative dispute resolution technique, has become very popular. Many contracts contain a mandatory mediation provision. Be aware of potential pitfalls: who bears the cost; who chooses the mediator; what happens if there is no response to a request to mediate; what happens should non-binding mediation fail to resolve the controversy.
Limit liability:
Stipulate that you are not responsible for consequential damages and/or that your liability is limited to the amount received pursuant to the contract. Or, if possible, limit damages to the highest monthly billing.
