I think people tend to have a negative image in their minds when they hear the word “collections” – the image of the bruiser knocking on granny’s door to take her refrigerator because she missed a payment. However, as a business owner, collections should mean something totally different to you. If you are a business owner and someone owes you money, you are a "creditor." If you are a creditor, you have rights! For that reason, collections law is sometimes referred to as "creditor's rights" - it has a nice ring to it, doesn't it?

Fortunately, most businesses encounter non-payers only infrequently, maybe a few times over the course of their business, but in certain industries it is more common. I receive many inquiries from creditors about enforcing their, rights, so here are the top three FAQ’s:

1. How long does it take?

That depends. Sometimes a demand letter from your attorney is enough to get the invoice paid or open the channels of communication to settle. On the other hand, you may have to go to court and that can take months, or years. Every case is different and depends on many factors so it is quite difficult to give any estimate without knowing the details of each case. Also if the non-payer has good reasons for not paying you (or even bad reasons), your case can become significantly more complicated. If you have a specific case in mind, give me a call and I can give you a better idea!

2. How much is it going to cost me?

Again, it depends. If your contract with your customer contains a strong attorney fee provision, you might be able to get the customer on the hook to pay your attorney for their collections efforts and costs. However, such a provision may not be worth the paper it is written on if we cannot find them or they do not have any money to pay you. On the other hand, it is a powerful leverage tool if a customer knows they have to pay what they owe you, and also your attorney. If you do not have an attorney fee provision in your contract, it is unlikeloy that you will be able to collect any of the attorney’s fees that you incur.

3. What are my chances of success?

Again, every case is different. (Are you noticing a trend here?) The first thing we want to look at to determine your chances of success is if the company you are pursuing is “collectable” – that is, do they have assets such as bank accounts with money in them, equipment, inventory, real estate, and the like? Or, are they out of business? If the company is out of business, it may not be worth pursuing them. On the other hand, it is not unheard of for companies to “pretend” to be out of business to get out of paying their bills...or to hid assets to avoid paying you… some investigation work is required. If we believe someone is hiding assets to avoid paying you, there are strong tools at our disposal to investigate that.

However, even if you obtain a judgment against your opponent but are unable to collect right away, if the judgment is properly “revived” it may remain valid for up to 27 years in Illinois. For example, imagine your customer owns real estate that is already encumbered and not worth anything; however, in five years the city plans a new park across the street and its value skyrockets – jackpot for you! You could then initiate foreclosure proceedings against the building. So, while it may be difficult to collect initially, it is often worth at seeking a judgment that can be held for many years.

If you have a collections issue, give me a call today!

The Supreme Court of Illinois does not recognize certifications of specialties in the practice of law and the certificate, award or recognition is not a requirement to practice law in Illinois.

The information on this blog is for general purposes only and should not be interpreted to indicate a certain result will occur in your specific legal situation.

The information on this blog is not legal advice and does not create an attorney-client relationship.