The debt recovery process can be time-consuming, costly and emotionally demanding. Even if you don’t make it to court, paperwork and consultations can quickly eat up your resources. That is why, before proceeding with legal action or enforcing a judgment, you need to ask yourself if it is worth it.
To ensure you are making the soundest decision possible, there are three factors you may want to consider.
1. Is there an alternative to legal action?
Going to court is often the most common solution when it comes to debt recovery. Before taking this step, consider whether other avenues may be a better option. Some other alternatives include:
Negotiations - Consider whether talking to your debtor directly or through third parties, such as lawyers, would help resolve the dispute. While this may mean compromising with your debtor, it could help you avoid the time and expense of more involved options.
Mediation - A mediator is a neutral third party whose role is to help you and your debtor come to an agreement while encouraging compromise. Though they are not free, and a resolution is not guaranteed, it is generally less involved and less costly than pursuing legal action.
Arbitration - Like mediators, an arbitrator is a neutral third party. Unlike a mediator, however, their decision is legally binding and enforceable. It is less formal than a trial and can be an effective way to resolve an issue. In terms of cost and time requirements, arbitration sits between mediation and going to court.
2. How much time and money will the debt recovery process require on your part?
Court fees, servicing fees and legal fees are just some of the costs associated with taking a debtor to court. While some of these costs are recoverable during the legal process, some are not.
Before deciding whether or not you are going to proceed with more aggressive forms of debt recovery, it is important to consider whether you have the resources to meet the financial and non-monetary demands of proceeding with legal action and whether the costs are worth collecting on the amounts owing.
3. Will you be able to recover debt from your debtor/defendant?
Determining a debtor’s assets, liabilities and whereabouts are key when considering launching a legal action or when attempting to enforce a judgment.
Not only do you want to understand their financial position, but you are also looking at your ability to collect on them. Your debtor could have all the assets in the world, but you may never be able to collect on them due to previous attachments and creditors.
If you fail to determine this information in advance, your legal actions could cost you more than you can collect.
As such, by determining the defendant’s worth, you can obtain valuable information to help you make the best possible decision at any stage of the legal process, including:
- Prior to commencing a legal action.
- During pre-litigation settlement discussions.
- When preparing for discoveries.
- During post-litigation settlement discussions.
- After obtaining a judgment to assist enforcement.
- When preparing for an Examination in Aid of Execution.
While it is true that you deserve what is owed to you, spending additional time and money without first determining whether or not there are even assets to collect, could leave you in a worse position than where you were when you started the debt recovery process.
To determine the probability of debt recovery, we recommend considering our suite of recovery and legal reports.
These reports will help you identify assets, including real property, personal property, motor vehicles and business interest, locate secured and unsecured liabilities, determine the debtor’s whereabouts for service purposes and locate bank accounts and wages for garnishment. The reports can also reveal fraudulent conveyances, assignments and preference actions.
Tags: Recovery / Legal