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3 solutions available after a business debt lawsuit

On Behalf of | Oct 10, 2024 | Collection

Most people who require the goods or services provided by a business pay for what they receive. However, some people attempt to defraud companies. They make payment arrangements, only to fall behind on their agreed-upon payments.

They ignore collection calls and refuse to fulfill their financial obligations. In that frustrating situation, companies may have to engage in collection activity. Sometimes, the simplest solution is to take the debtor to court.

What are the debt solutions a business can seek in the civil courts?

1. A judgment

Many people loathe the idea of having an outstanding judgment on their record. When the courts rule in the favor of a creditor, they may take immediate steps to pay what they owe. Simply having a judgment declaring that the debt is valid and that the debtor must make payments can sometimes be enough to bring a financial obligation that has fallen into default back into compliance.

2. Wage garnishment

The courts can actually approve arrangements in which a creditor intercepts a portion of a debtor’s wages. Wage garnishment can help with collection, although state law does limit how much a creditor can receive by garnishing an individual’s wages. Sometimes, service with lawsuit paperwork is enough to compel debtors into compliance.

3. Property liens

In some cases, creditors can ask the courts to secure and otherwise unsecured debt. They can request a lien against a debtor’s personal property. Homes and vehicles are often subject to lien requests related to unpaid financial obligations. If people cannot sell or refinance their major assets without paying a debt, they may prioritize fulfilling their obligations.

Creditors need to be ready to follow through with litigation, which typically means setting a specific goal. Requesting a judgment, asking for a lien or seeking to garnish wages can all be viable solutions for businesses frustrated by unpaid debts.