Be nice until you have to file suit. Make written and verbal contact with the debtor asap, but be nice about the delinquent debt. We want to be voluntarily paid by the debtor if possible. Keep options open until you have to file suit. Every business is different about how long they will allow account receivables to go delinquent. From a business owners' perspective, it is better long term for business to be patient. If your business starts sending nasty letters after only 30 days, not only do you risk not getting paid, but you also risk losing future business. The goal before filing suit is to allow the debtor to voluntarily fund a future lawsuit against them. As a general rule of thumb, I will often accept monthly payments from debtors that extend no longer than 6 months. Of course there are many factors; such as other lawsuits, the amount of debt, etc. The bottom line: Keep all options open early and try to collect as much as possible before filing suit.
Step 2: Expedite that lawsuit if you can.
If you are not immediately receiving significant payments towards the debt owed, it is time to file suit. Until you obtain a judgment, the debt is only alleged to be owed. Ideally, the debtor will not respond to the complaint and a default judgment can be entered. The faster you obtain your judgment, the further ahead in line of other creditors you will be. There are ways in the form of discovery and summary judgment motions that can expedite the filing of your judgment. It is more work for your lawyer, but will speed the case along. Otherwise, you will need to win an award or verdict. This means that you need to be prepared at trial. Be sure to ask your lawyer if there is an advantage to filing in arbitration or not? Depending upon the solvency of the debtor, it may be better to find a collection attorney who will take the case on a contingency basis. Bottom line, be aggressive with litigation, and do what is necessary to prove the debt is owed asap.
Step 3: Enforcing the Judgment.
Once you praecipe for judgment based upon the award or verdict, you can then issue a 'writ of execution'. The 'writ of execution' is your symbolic key to try to collect money owed. Once you issue the writ, you have 3 primary methods for collecting. First, seizing a bank account. You can have the sheriff serve the writ at a bank with interrogatories which effectively freezes the bank account. You can get paid your judgment amount directly from the bank. Second, you can seize and tow a vehicle, or set it for sheriff sale. Third, you can have the sheriff perform an inventory of the defendants assets for public sheriff sale. If you want to pay the costs, you could perform all three actions at the same time. Understanding the execution process, and properly investigating the defendants assets can save clients a lot of money. Sometimes, you only get one shot at getting paid through an execution, so strategy and decision-making is crucial in getting you or your business paid.