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Identity Theft

When a debtor informs you that they are a victim of identity theft, you must stop your collection efforts and follow certain procedures.  However, the debtor must do the following first before you have to stop.  They need to provide the following:

  1. They need provide you with a copy of the police report filed by them alleging that they were a victim of identity theft, and
  2. A written statement that they claim to be a victim of identity theft with respect to the specific debt at hand

Upon receipt of these documents, you must stop your collection activities until you are done reviewing all the documentation.  The debtor written statement can be in a form of a affidavit attested to under penalty of perjury under the law.  A person submitting the declaration who declares as true any material matter that he or she knows to be false is guilty of a misdemeanor.

Debtor Represented By Attorney

Under federal law, a debt collector who knows that a debtor is represented by an attorney regarding the subject matter debt and has knowledge of or can readily ascertain the attorney’s name and address may not communicate with anyone other than that attorney unless the attorney fails to respond to the debt collector’s communication within a reasonable period of time.

Calling Debtors

You can legally try to collect past due bills by calling the debtor.  But you cannot legally call them on the phone over and over again.  It is also against the law to threaten them with harm or contact them at work after they tell you not to.  In addition, the law says that if they write to you and ask that you not contact them at all, you must stop.  At that point, you can only contact them to let them know that you are suing them.  So it is a good idea to keep records of your calls and written communications to them.

If the debt is not a commercial debt, you are not supposed to contact their employer, except to verify their employment.

You should never send anything that is meant to look like a legal document when it is not.

How Long Do You Have to Sue?

How long you have to file a lawsuit depends on what is called the Statue of Limitation that is applicable to your fact.  The Statute of limitation varies depending on the type of contract or claim at issue.

– Oral Contracts – you have two years.

– Written Contracts – you have four years.

– Common Count – The Statute of limitations for all common counts based on a writing is four years.  Without a writing, the statute is two years.

So what does that all mean?  It means that if you have a written contract with the debtor and they fail to pay then you have 4 years from the date they failed to pay to file your lawsuit.  If its an oral contract like, I will sell you 4 dozen apples and you pay me $100 by January 15, 2008, then you have two years from January 15, 2008 to file your lawsuit.

Lastly, what is a Common Count?  Well stay tune and we will address that question shortly.

Bank Levy

What is a bank levy you ask.  Levying on a bank account is a process whereby you can take funds from someone’s bank that owes you money.  The amount that you can take is limited by the amount that you have a Judgment for and how much is actually in the bank account at the time you do your bank levy.

For example, if you have a judgment for $2,000.00 and there is $2,500.00 in the bank account at the time of levy then $2,000.00 is taken.  If for example, you have a judgment for $2,000.00 and there is only $500.00 in the bank account then you only get $500.00.  However, you can do as many bank levies until you satisfy your judgment.

What is needed to get do a bank levy is first a Judgment.  Once a Judgment has been awarded, you need to get a Writ of Execution which cost $25.00 in Los Angeles.  You then take the Writ of Execution and give it to the sheriff, along with the Marshall’s Instruction and a check for $30.00 for each bank levy attempt.

All this assume that you have banking information on the person you are trying to levy upon.  Banking information means, their bank.  This can be obtain from previous checks that they have paid you with, where they cashed your checks that you tendered to them, if credit application or references that they have provided to you.

State Court Verus Federal Court

Deciding which court that you want to sue in can depending on many factor.  Perhaps the most important is the amount in controversy and if you are a multistate company.  If the amount of the debt is over $75,000.00 and your company has offices in more than one state then you might want to consider filing in federal court.  Filing in federal court cost about $350 to file your lawsuit.  However, it is more time consuming due to the federal laws and local rules that you have to follow.

The amount in controversy should not be the controlling factor.  The most important thing should be whether, your company has a location with more favorable laws to use to its benefit or if there are federal statutes or legislation that is more beneficial than state law.

Otherwise, I personally think it is always cheaper, easier, and faster to file in State court.

Filing Fees

The filing fees in the Los Angeles county are as follows:

0 – $10,000.00 is $200.00

$10,000 – $24,999 is $325.00

$25,000 – above is $350.00

This is the cost of filing a lawsuit in Los Angeles.  Its important to consider this when you have a debt in California and you want to file a lawsuit.

Collection Tips

One of the best things that you can do when opening a new account for a vendor or customer is to make sure you get their banking information.  A copy of a check.  Anything with their bank account number and banking institution.

This is so helpful when you have to turn the matter over to an attorney.  It will give you an account to go after when you get a judgment against the debtor.

You can faciliate this by requiring a copy of a cancel check as part of the application process.

Know Your Debtor

When trying to collect on a receivable, you first need to gathered as much information about your debtor before you can formulate a plan to collect on the debtor.  Figure out what type of business they are – corporate entity or solo proprietorship.  Do they have various locations or just one location.  How do they normally pay you – checks, credit cards, money orders and etc.

Is the business relationship personally guaranteed.  Call their telephone number to see if they are still in business.  As the sale staff about the debtor’s business.  See if you can find out if there is a dispute or just a failure to pay your bills.

Knowing your debtor will help you plan your attack.  If the matter is a billing dispute then that is right up your alley.  If it involves something more than gathering the information will be useful if you need to outsource the matter to a law firm to collection on.

Corporate Claims

Lets face it, everyone of us who has worked in the accounting department of any company has had to deal with a stack outstanding receivables that we need to pursue.  In the collection world, these outstanding receivables as called corporate claims or commerical debt cause the debtor is a business and not an individual.  It helps to know what type of debt you have when dealing with collection attorneys or agencies.