Business Magazine

Can the Courts Help to Collect Your Debts?

Posted on the 16 March 2015 by Ncrimaldi @MsCareerGirl
Can the Courts Help to Collect Your Debts?

Whether you are owed money personally or your company has debt to collect, the obvious remedy is to turn to the courts for help. But just how effective is the legal system for recovering debts?

Effective in Certain Situations

There are three particular sets of circumstance where the courts can be especially useful:

  1. As an Ultimatum- The threat of going to court is often enough to make a debtor pay up.
  1. When Your Debtor Disputes Your Claim – If your debtor does not accept the debt exists, the courts can investigate the matter and order them to pay you.
  1. If Your Debtor Is Able to Pay But Refuses- The courts can take action against debtors who simply refuse to pay, ensuring you receive what you’re owed.

Limitations of the Court System

There is one major limitation on the courts’ ability to recover debts: if your debtor simply cannot afford to pay you, there is not much they can do about it. While they may issue bankruptcy or winding up orders, this is unlikely to help you receive the full amount you’re due.

Also, if your debtor disputes your claim, and you are unable to provide concrete proof the debt exists, the courts are unable to force repayment.

Finally, it can be expensive to turn to the courts. And if you lose your claim or your debtor is unable to pay, you won’t be able to reclaim these expenses, leaving you even further out of pocket.

Increase Your Chances of Success

If you decide to pursue a debt through the court system, it’s important you do everything possible to increase your chances of success. In particular:

  • Prove the Debt Exists – Before the debt is created, make sure you have proof of its existence, where possible this should be a written contract. And if the debt depends on the provision of goods or services, make sure you have proof you fulfilled your contractual obligations.
  • Seek Legal Advice – Before applying to the courts, consult a legal expert who can advise you on how to best proceed with your claim.

Avoiding the Courts

Of course, the best solution in most situations is to recover your debt without having to involve the courts at all. Here are a few ways to do so:

  • Don’t allow any person or company to become indebted to you unless you trust them fully and are convinced of their ability to repay.
  • Be flexible and open to compromise. It’s better to receive a late payment or some payment than none at all.
  • Use a mediator. A mediation service can help you reach an agreement with your debtor regarding repayment, a faster and cheaper alternative than going to court.
  • Use a debt collection agency. They take over responsibility for collecting your debt, so you don’t have to worry about it.

Courts as a Last Resort

Where possible, it’s best to avoid the courts when seeking repayment of debt. But if your debtor can afford to pay and simply refuses, or if they dispute the existence of the debt, the court system is a very effective last resort once you have exhausted all other options.


You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • Video: Climbing The Nose on El Capitan in Yosemite

    Video: Climbing Nose Capitan Yosemite

    Thanks to the recent speed record set by Alex Honnold and Tommy Caldwell, there has been a lot of talk about The Nose route on El Capitan in Yosemite recently. Read more

    The 19 June 2018 by   Kungfujedi
    OUTDOORS
  • Paper Fix | Pop-up Card

    Paper Pop-up Card

    greenhouse pop-up card | terrain Read more

    The 19 June 2018 by   Ofpaperandthings
    HOME, LIFESTYLE
  • Finding Your Own Yoga

    Finding Your Yoga

    by NinaKitchereeIf you carefully read the Yoga Sutras cover to cover and learn about what the eight-fold path really entails, you would realize—and maybe you... Read more

    The 19 June 2018 by   Ninazolotow
    FITNESS, HEALTH, HEALTHY LIVING
  • Bad Fruit is Bad

    Fruit

    Yesterday I wrote about the wind, meaning, the Spirit, blowing where it will. I wrote of how we can't see the wind at the time but we can see its effects. One o... Read more

    The 19 June 2018 by   Elizabethprata
    SOCIETY, SPIRITUALITY
  • Supermarine Seafire F.XV

    Supermarine Seafire F.XV

    @ Oshkosh, WI July 2010 My first Seafire sighting, seen at 2010 Oshkosh Airventure.  The number of articulating bits on this aircraft are certainly impressive. Read more

    The 19 June 2018 by   Htam
    PHOTOGRAPHY, SOCIETY
  • The Eyecicle • Temperature Cooling, Anti-Aging Beauty Device

    Eyecicle Temperature Cooling, Anti-Aging Beauty Device

    Facial massagers have become a popular beauty buy of late and even though they have been around for years and used in many a facial treatment, they have become... Read more

    The 19 June 2018 by   Kellilash
    HAIR & BEAUTY, LIFESTYLE
  • Karakoram Summer 2018: Individual Expeditions to Keep an Eye On

    Karakoram Summer 2018: Individual Expeditions Keep

    Yesterday we shared a few updates from the Karakoram about the current status of a few teams that have already started to arrive on their respective mountains. Read more

    The 19 June 2018 by   Kungfujedi
    OUTDOORS

Paperblog Hot Topics

Magazines