Georgia Commercial Debt Collection: Attorney or Agency?

You have worked hard to build a thriving business and things are going great, but your margins just are not adding up.  Quick research yields that your business has a number of delinquent accounts on the books, and it is beginning to adversely affect your cash flow.  You make calls yourself, but just cannot seem to get these customers to pay, so now you look outward for help.  Your first major decision point is whether you hire a collection agency or a collections attorney.

With ever-increasing protections for debtors, the rules for creditors to collect debt have become stricter with more severe punishment for violations of the Fair Debt Collection Practices Act, including monetary damages, attorney’s fees, and more.  No matter which party you ultimately choose, it is paramount that the collector operate on the right side of the law.  That said, both agencies and attorneys are operating under the same goal, which is to collect on the debt that you hired them to retrieve.  There do, however, exist differences in regards to how an agency attempts to collect a debt vs. efforts of an attorney.

Collection agencies will often take the same steps to collect as you did, using a multi-communications strategy to reach the debtor. This can include phone calls, letters and/or emails to retrieve what is owed you.  A collections agency can also file a credit report on your behalf.  The use of a third-party name can instill greater urgency within the debtor to pay and the collection agency has experience they can draw from to drive results.  An agency is a superior option when there is a large amount of accounts with a small delinquent balance to recover on.

A collection attorney could take similar steps and produce a different effect.  The largest difference in approach is that an attorney can also take a debtor to court on your behalf.  Retaining a Georgia collection attorney holds more weight and authority since it signifies that legal action may be imminent.  If court becomes necessary, a judgment in your favor opens up alternative methods to collect the money owed, such as wage garnishing, tax liens, and income collections that are not available through agency collection.

You may still not get the entire amount owed to you, but you now have other ways to recoup at least a portion of the funds.  Collection Attorneys are the clear choice when there is a large delinquent debt that would incur significant hardship on the creditor should the delinquency carry on.  This is because an attorney can pursue the matter beyond credit reporting and phone calls, compelling the payment of the debtor through the court system.

Hiring a law firm specializing in debt collection has many advantages.  Thrift & McLemore’s attorneys are qualified in the State of Georgia to collect debts on behalf of their clients.  We can save you time, money, and frustration because prior to any collection action, we evaluate the legal merit of your claim, including statutory and evidentiary review.  Contact Thrift & McLemore by email at [email protected] or by phone at 678-784-4150 to discuss how we can help you and your organization today!

Georgia Small Business Debt Collection Suggestions

Georgia Small Business Debt Collection:  It is no secret that the key to running a successful business is a healthy bottom line.  Businesses need profits to continue operating, paying their bills, and their employees.  For small businesses especially, every little bit counts, and it is important to keep an eye on everything coming in and going out.  This is why it can be especially devastating to small business owners when customers do not pay their invoices on time.  These delinquencies can create solvency issues for the business that may ultimately threaten its own ability to pay bills on time.

Some degree of invoice delinquency is simply unavoidable.  Be it a dispute regarding the service performed, solvency issues on behalf of the customer, or just people looking for a free ride – certain customers just do not pay their bills.  There are certainly means to address these customers, but there are also steps you can take as a small business in Georgia to minimize delinquent invoice accounts.

Keep your cool.  It is a natural reaction to become hostile with a customer who will not pay their bill after you have performed a valid service.  While you have every right to be frustrated, taking it out on the customer will be of no service in getting that bill paid.  Once hostility is introduced to the matter at hand, cooperation likely goes out the window.

Stay Organized.  This is critical in dealing with overdue invoices from a customer.  Businesses need to have great documentation of outstanding receivables, including each invoice delivered and the respective due date.  It should also monitor each time the customer received correspondence from the business, and the means by which this was done (mail, email, or phone).  Debt collection law in Georgia can be complicated, and keeping records like this will ultimately help down the road should the dispute turn into a lawsuit.

Remain Diligent.  While you may feel that you are at the mercy of the client, remember that this is a valid debt.  While remaining respectful, you should use every tool at your disposal to be paid for the work you have performed.  Regularly contact the customer.  It may be an honest mistake at first, and simply reminding the customer of the bill does the trick.  This can be done via a quick phone call or resending of the invoice.  If this does not work, you can institute a deadline for payment.

Know your options.  If you have followed all of the steps above and still gotten nowhere, it may be time to hire some help.  Many debts in Georgia can be considered delinquent after 90 days, at which point it is possible to take legal action.  Introducing a collections attorney can help to navigate the legalities of debt collection while turning up the pressure on the delinquent client.  If all else fails, this attorney can file a lawsuit for the debt.  An experienced attorney will be able to walk you through all of the necessary requirements for taking action of last resort.

If you have questions regarding a delinquent debt for your Georgia business and need some answers, let us help!  Thrift & McLemore’s attorneys are qualified in the State of Georgia to collect debts on behalf of their clients.  Contact Thrift & McLemore by email at [email protected] or by phone at 678-784-4150 to discuss how we can help you and your organization collect on your receivables and delinquent debts.

Collecting on your Georgia Commercial Debt through Garnishments

As a creditor in Georgia, and especially one experiencing delinquent debts, your first objective is to pursue any legal means to obtain satisfaction of the debt owed to you.

Lawyer Atlanta GA

There are many ways for creditors to collect this delinquent debt, with varying degrees of difficulty, all of which depend on how hard the debtor intends to fight payment.

The easiest and most commonly adopted approach involves the use of a qualified attorney or debt collection agent.  This individual or entity will begin by sending either a demand letter or otherwise attempting to contact the delinquent debtor to amicably resolve the debt and get the creditor paid.  Unfortunately, this approach has mixed success.

More common in Commercial debt collection matters, due to the sophistication of parties, and contractual nature of the agreements, the creditor must go to court and receive judgement on delinquent debt in their favor, which then entitles them to act in regards to compel payment.  This judgement is a declaration by the court that the debt is valid, and the creditor can now seek to enforce the debt.

The most common tool used by these newly appointed “Judgement-Creditors” is Garnishment.  Georgia Garnishment Law is found in Title 18 Chapter 4 Article 4 of the Georgia Code, and follows the federal rules generally.  Specifics on the process can be found in OCGA 18-4-4 which outlines the process and period of Garnishments in the state.  There are two ways to enact a garnishment on a delinquent debt once judgment has been granted or the debt otherwise perfected.

The most common of these is a Summons of Garnishment, or simply a bank garnishment.  If a bank is served with this garnishment, they must immediately place a hold on the debtors account and may to the court all funds on deposit at the time of service, plus any additional funds that may be deposited into the account within the next 30 days.  After this thirty-day period, the garnishment is no longer in place.

Although less common, Georgia also allows the perfected creditor to garnish a debtor’s wages by way of a Continuing Garnishment.  After receiving service of a Continuing Garnishment, the employer of the delinquent debtor must pay into the court 25% of the debtor’s net take home pay.  This garnishment remains in place for the lesser of 180 days or the full extent of the debt has been satisfied.  Georgia also allows for renewal of this garnishment, but it must be again filed with the court.

Garnishments are generally filed in the Magistrate Court in the county for which the garnishee is physically located.  Costs may vary county to county, but are typically around $50 for filing, plus the cost for summons of service.

If you have questions regarding a delinquent debt of any kind and are at a loss for how to move forward with collecting it, let us help!  Thrift & McLemore’s attorneys are qualified in the State of Georgia to collect debts on behalf of their clients.  Contact Thrift & McLemore by email at [email protected] or by phone at 678-784-4150 to discuss how we can help you and your organization collect on your receivables and delinquent debts.

Thrift & McLemore Launches Commercial Collections Practice Area

Atlanta, GA – We are pleased to announce the launch of our Commercial Collections practice area.  Our new practice area specializes in handling commercial collections claims in commercial debt recovery and litigation.  Thrift & McLemore’s Commercial Collections practice includes open accounts, unsecured and secured loans, credit cards, automobile loans, student loans, foreign judgments, real property foreclosures and commercial claims.   We represent commercial creditors, financial institutions, government entities, insurance companies, service organizations and certain individuals in recovering commercial loans.

Thrift & McLemore is proud of our record of service to business clients.  The breadth and scope of our practice encompasses:

  • Sale of goods disputes
  • Dealer disputes
  • Distributor disputes
  • Collection on letters of credit
  • Issuing demand letters
  • Bankruptcy workouts
  • Litigation
  • Collection on business agreement defaults
  • Attachments
  • Garnishments

Working together, the location of tangible assets, existing contracts and employment, bank accounts, equity in inventory and other assets, may be located and serve as a basis for recovery.  We are dedicated to the proposition of being a vital part of a client’s credit and recovery.

Dealing With The Commercial Foreclosure Process (Borrowers and Tenants)

If a commercial borrower (or commercial tenant) falls behind on commercial building payments (or lease payments), the lender or lessor can declare a default and foreclose on the property.  The execution of a mortgage or deed of trust (or lease agreement) creates a security interest in the property that gives the lender the right to start foreclosure proceedings to force a sale of the property (or eviction) upon the borrower’s failure to pay the loan/lease according to terms.  The good news is that lenders don’t like foreclosures because they’re costly and difficult. The bad news is that lenders won’t hesitate to foreclose on past due loans (or leases) if they aren’t given better options.

If you are a commercial property owner facing foreclosure, or a commercial tenant with a landlord in foreclosure, it is important to keep in mind that there are many legal intricacies involved with foreclosures.  It may be beneficial to employ the services of Thrift & McLemore to help you navigate the process and ensure that you fully understand your rights under the law.

Commercial foreclosures are, in most cases, very similar to residential foreclosures.  The foreclosure may be nonjudicial or judicial depending on the state where the property is located and what the loan documents dictate.  With both nonjudicial and judicial commercial foreclosures, the process starts when the borrower defaults on the mortgage.  A default occurs when the borrower falls behind in payments or fails to do something that the loan documents require.  After the default, the lender may accelerate, or call due, the outstanding balance on the loan.  Typically, the lender must first send a breach letter to the borrower that outlines the reason for default and gives a time frame during which the borrower may cure the default and avoid acceleration.  Usually, the amount of time given to cure a default is thirty days, but this can vary depending on the terms of the mortgage.  Once the time period expires, if the borrower has not cured the default, then the lender may commence foreclosure proceedings.

Tenants’ Rights Following a Commercial Foreclosure

The rights of any tenants in a foreclosed commercial property will depend on the terms of the lease and the date on which the lease was signed.  The tenant’s interest could potentially be terminated by a foreclosure due to the legal concept referred to as “first in time, first in right,” which allows the purchaser of a foreclosed property to void a lease if the mortgage was executed before the execution of the lease.

Many commercial leases contain a subordination, non-disturbance, and attornment agreement, or SNDA.  Under the terms of an SNDA, the tenant agrees to subordinate its interest in the lease to any lender making a loan secured by the commercial property; the tenant agrees to attorn to, or recognize, any new owner of the commercial property as its landlord; and any new owner of the commercial property agrees not to disturb the tenant’s possession of the property as long as the tenant pays rent and complies with the terms of the lease.  For tenants, an SNDA provides some assurance that their rights to their premises will be preserved even if the property is foreclosed.

-Options in Dealing with Foreclosures

The chances are that a commercial building loan is only a part of bigger financial problems.  Rather than delaying, a borrower should develop a game plan to deal with the situation immediately.  Options include:
  • Reorganizing, consolidating or even eliminating debts through proceedings that may include bankruptcy
  • Trying to work out a compromise with the lender
  • Selling the building

-Negotiating with the Lender

A lender may be willing to compromise.  Possible options include the following:
  • Different payment terms (lower payments over a longer period of time)
  • Forgiving some late payments now in exchange for a longer period of payment
  • Lower payments in exchange for a higher interest rate over a longer payment period
  • Refinancing at a lower interest rate (to make payments lower)

-Deeds In Lieu of Foreclosure

If a lender is unwilling to compromise, consider offering to convey the property back to the lender voluntarily by a “deed in lieu of foreclosure” (sometimes called “deed in lieu of forfeiture”).  A lender may be hesitant to accept a “deed in lieu” if state law provides a borrower with a right to redeem property for a certain period of time (e.g., up to a year later).

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