Nathan D. Wirtschafter
Nathan D. Wirtschafter - Making Your Case in California

Business & Corporate Litigation
Civil Litigation
International Litigation

Collecting Debts in Bad Times

Challenging economic conditions erode payment integrity. Companies and individuals, facing sinking margins and tough competition, cannot meet their day-to-day cash flow needs. Others struggle under the burden of too much debt or variable interest rates.

However, much of the time, non-payment is deliberate. Corporate debtors ask for time extensions or discounts to fund acquisitions of struggling competitors. Or, the principals cry poverty while financing expensive life-style choices.

Mr. Wirtschafter is experienced in complex debt collection from corporations and their principals. On several occasions, Mr. Wirtschafter has found evidence which allowed his clients to “pierce the corporate veil” and find corporate principals and shareholders personally liable for the corporation’s debts.

In addition, in many instances, a call from “collection counsel” has led the debtor to prioritize payment. Depending on the situation, a company debtor may make immediate payment, or payment in a short period of time.

On some occasions, Mr. Wirtschafter’s review has led to an immediate closure of the account before expensive legal bills send good money after bad.

Before hiring an attorney to collect a significant debt, ask the attorney the following:

  • What experience do you have in collecting large debts?
  • What experience do you have in evaluating the debtor’s ability to pay debts?
  • What approach will you take that will minimize legal fees yet maximize the chance of quick recovery?
  • What options exist to secure payment?
  • Have you ever pierced the corporate veil?
  • Have you ever obtained a court order to review personal bank accounts?
  • Are you familiar with writs of attachment, a procedure to seize assets before trial?
  • Are you experienced with procedures for collecting debts outside of court, such as face-to-face meetings, mediation or arbitration?
  • Are you familiar with the Uniform Fraudulent Transfers Act (UFTA)?

A debtor who is more than 90 days past-due in paying its receivables may be insolvent. Creditors should review every such overdue account for possible assistance from collection counsel.

An overdue debtor whose obligation represents more than 10-20% of a creditor’s receivables is more than a threat to cash flow. Rather, such a debtor is a threat to the creditor’s profitability.

By acting sooner rather than later to request assistance of counsel, a creditor can speed either collection or determination that an account should be closed. If a creditor waits too long, the debtor will be long gone.

To speak with a knowledgeable attorney who can provide a free consultation about collecting debts call (818) 660-2518 or Contact Us and a lawyer will respond to you promptly.