In their business activities, companies often encounter situations where their partners fail to make timely payments, leading to bad debts. These difficult-to-recover debts can have a significant impact on a company’s cash flow, whether they are payments from a customer who has not paid for goods or services or payments for fulfilling contractual obligations. In such circumstances, companies can turn to the professional debt recovery services of law firms. In this article, we will analyze the tasks that law firms typically use in the debt recovery process.
Negotiation is the first task that law firms use when providing debt recovery services. In this stage, the law firm will propose a respectful and constructive payment plan to the debtor. In this task, the law firm will research and prepare all documentation related to the debt and legal regulations to compel the debtor to fulfill their payment obligations. If the debtor cooperates with payment, the law firm will propose the signing of reconciliation statements, confirmation of debts, and a specific payment schedule to bind the debtor’s obligation to repay.
In cases where the debtor does not cooperate during the negotiation process, the law firm will move on to the next debt recovery task, which involves sending more assertive letters.
2. Sending Payment Request Letters
This is the next task in a law firm’s debt recovery service if negotiation fails or if the debtor does not cooperate in the negotiation process. The law firm will send payment request letters, which usually include:
• Detailed information about the debt and the amount that the debtor must pay
• The deadline for the debtor to make the payment or respond to the payment request
• Legal measures that the law firm will apply if the debtor does not cooperate with payment within the deadline
These letters will be sent via email or by mail to the debtor’s headquarters address (depending on the information that the law firm has gathered about the debtor). After the debtor receives the payment request letter, the law firm will monitor the debtor’s payment process. If the debtor repeatedly fails to pay or respond to the payment request letter, the law firm will propose further actions to the client.
3. Working with the competent tax authorities
In case the debtor’s whereabouts are determined to no longer be at the registered address, the law firm providing debt collection services will work with the competent tax authorities to request an inspection of the debtor’s registered address. If the debtor is still in operation but not at the registered address, the law firm will request that the tax authorities issue a notice to terminate the debtor’s tax code to recover the business registration certificate.
Termination of the tax code and recovery of the business registration certificate will seriously affect the debtor’s profits and force them to consider payment options. Typically, working with the tax authorities will be notified by the law firm to the debtor during the stage of sending a payment request letter. In cases where the debtor does not cooperate with payment, the law firm will work directly with the tax authorities to increase pressure on the debtor to pay the debt.
4. Filing a lawsuit at the Commercial Arbitration Center or the Court
In debt collection services, filing a lawsuit will be the most impactful stage and will only be carried out if the above steps have been implemented but have not yielded results. At this point, the law firm will propose to initiate the final step of filing a lawsuit with dispute resolution institutions such as the Commercial Arbitration Center or the Court. Accordingly, at this stage, the law firm will request the company to submit a lawsuit to request the Court or Commercial Arbitration Center to settle the dispute based on evidence and documentation of the case. The choice of dispute resolution agency depends on the content of the contract between the parties.
At this stage, the debtor will be summoned by the Commercial Arbitration Center or the Court to participate in litigation procedures. After conducting the necessary procedures, the Commercial Arbitration Center or the Court will issue a legally valid judgment or ruling. After the judgment or ruling becomes legally effective, it will be enforced by the competent civil enforcement agency in the name of state authority to force the debtor to pay according to the provisions of the law.
The above is an article by TNTP on the debt collection services that law firms will perform, hoping that this article will be useful to businesses.