Do You Still Have Time To Collect The Debts Owed To Your Business?
Running a business would be easy if everyone paid you the money they owed you. In practice, almost every business operation involves lots of unfulfilled promises, including promises of payment. Not every customer who enthusiastically agrees to buy your products or services will have the money to pay for them when the bills come due. There is a reason that businesses so often sell their debts for pennies on the dollar. Business to consumer lawsuits have been on the rise nationwide in recent years, although the increase has been sharper in the Deep South than it has been in the Washington DC area. Your rights regarding the collection of debts owed to your company vary according to the kind of debt and how long ago the debtor incurred the debt. A Washington DC small business lawyer can help you collect debts that customers or companies owe to your small business.
Four Kinds of Debts, According to Maryland Law
Creditors have the right to file lawsuits against debtors in order to collect payment of the debt. If the debtor does not pay even after the court issues a judgment in your favor, then you can file a motion in court to have the court garnish the debtor’s bank account, paycheck, or some other asset that the debtor can use to pay you. You can only file a lawsuit against the debtor if you meet the deadline set of the statute of limitations. For promissory notes, where the payment agreement includes specifics such as an interest rate and a timetable for installment payments, the statute of limitations in Maryland is six years; examples of promissory note debts include home mortgages and car loans. For all other kinds of debts, the statute of limitations is three years. This includes debts formalized by written agreement (such as medical bills and cell phone service agreements), open-ended accounts such as credit card accounts, and even debts formalized by oral agreement.
When Unpaid Debts Are Only Part of the Problem
Unpaid bills from customers are just one of the problems that small businesses can encounter when trying to collect debts owed to them. If another company, or even an employee or business partner, did not do what they formally promised to do, whether that obligation was a payment of money or some other action, this is a breach of contract, and you have the right to file a breach of contract lawsuit. In order to win a breach of contract lawsuit, you must prove that you and the other party entered into a valid contract, that the other party breached the contract (that is, failed to perform their contractual obligations), and that you suffered financial losses as a result of the breach.
Reach Out to Us Today
A small business lawyer can help you formalize and enforce payment agreements and other types of contracts with other businesses or individuals. Contact Tobin, O’Connor & Ewing for help.