Collecting Unpaid Debt

 

In these difficult economic times, too many people are feeling the effects of shrinking retirement accounts, failed investments, and mounting bills.  In such a setting, the sting of seemingly uncollectable debts has become increasingly acute.

 

These days, many debts go unpaid.  And if you’re a creditor, chances are you’ve also got your own debts to pay.  So how can you collect unpaid debts?

 

Sometimes, a demand letter or meeting is all it takes to convince a debtor to make your account a priority and begin repayment.  In fact, in many cases, the debtor acknowledges the debt and is willing to enter into a confession of judgment.

 

A confession of judgment is an actual judgment through which a debtor agrees to be bound in the same way he would be if a judge or jury handed down a judgment in your favor.  In a typical confession-of-judgment scenario, the debtor signs both a confession of judgment and a settlement agreement.  The settlement agreement sets forth a mutually agreeable repayment plan and authorizes the creditor to file the confession of judgment in court if the debtor defaults in payment.

 

When a debt is not in dispute, both parties have an incentive to enter into a confession of judgment.  The debtor usually receives more time to repay the debt and can avoid a lawsuit or the adverse credit consequences of having his debts turned over to a collection agency.  Likewise, the creditor gets the added security of a judgment to back her collection efforts without having to litigate an expensive and emotionally draining lawsuit or having to pay a steep contingency fee to a collection agency.

 

If you have uncollected debts, there are often cost-saving alternatives to litigation.  Contact an attorney experienced in collection work.

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