Creditors’ rights: options for getting paid

Your business works hard. You, as a creditor, deserve to be paid for your efforts. Sometimes, though, your customers simply don’t pay their bills on time. You may be wondering what your debt collection options are, both in and out of the courtroom.

Non-judicial options

So-called “self-help” options don’t require any sort of judicial involvement. You don’t need to file extra paperwork or get court approval for them. These include:

• Billing and contacting the debtor directly in an attempt to get them to pay the debt – you may add reasonable interest or penalties to customer accounts over a certain age, subject to New Mexico state usury laws.
• Using the services (and manpower) of a collection agency – this will cost you a portion of the debt in fees, as collection agencies typically keep a percentage of the funds that they collect, but they have the resources to attempt collection when you might need to instead focus efforts on running the business.

Judicial remedies

These debt collection methods require court involvement. It depends on the amount of debt at issue as to what type of debt collection remedy is appropriate.

• Small claims court – if the debt isn’t substantial in nature (states have their own threshold for dollar values that can be handled in small claims court), then a small claims court filing might be appropriate. Small claims courts have fewer procedural technicalities than traditional courts. This means you won’t have quite as many “hoops” to jump through in an attempt to collect on a debt.
• Other lawsuits – if the debt is over the threshold amount for small claims court, and other collections methods have failed, you’ll need to file a traditional lawsuit to get paid. Once you’ve won the lawsuit, though, you’ll be entitled to a judgment wherein you can garnish a debtor’s wages, repossess secured property or file a lien to enforce the judgment. Any collections lawsuit should be filed with the assistance of a qualified attorney to ensure that your matter is handled correctly and with due care.