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Debt Collections In USA, How it Works

Debt collection in The United States is subject to the laws and regulations set forth by two legal systems.
The first, based on the United Kingdom’s Common Law, is enacted throughout virtually all of the country, excluding Quebec.
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In that province, the legal system and regulations are setup to mirror the French Code Napoleon.
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Our debt collection agency in The United States is bound by both systems.
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USA

Debt Collection Agency Service United States maintains two tiers within its American collection process.

The first is dedicated to an amicable resolution of the debt, while the second is focused on legal proceedings that are designed to help enforce and collect the debt. Amicable collection allows Debt Collection Agency Service US to pursue the full outstanding balance of the debt, plus any interest or collection costs and attorneys’ fees.

‍The legal collections process involves the filing of a lawsuit against the debtor. This will allow us to pursue only the outstanding balance of the debt, unless an agreement exists between the creditor and debtor that allows us to pursue any interest and collection costs that were incurred before the judgment, as well as any attorneys’ fees that should be paid by the debtor.

Amicable collection

Debt Collection Agency Service United States pursues the first phase of the collections process using its own in-house team of professional staff members. Their job is to pursue debtors as thoroughly as possible with the constraints of United States laws that have been passed at the federal, state, and local levels. Our job during this task is to focus on creating a healthy relationship between the creditor and the debtor in order to ensure payment of the debt.

Our professional staff makes sure to work with our clients in an efficient and timely manner, working to collect debts as quickly and effectively as possible. Our debt collection agents are also charged with extensively documenting the debtor’s file as collections activities proceed, as this is a key part of our legal defense if we must pursue legal action against the debtor if the amicable phase does eventually fail.

Upon the failure of the amicable phase of collections, Debt Collection Agency Service United States will immediately proceed to the legal phase of the process.

Legal collection

After the failure of the amicable phase, the collections process proceeds to a second tier that involves legal collections professionals. This is not handled in-house by Debt Collection Agency Service United States, however, as the United States has a large and capable network of dedicated legal collectors who are involved with an extensive network of collection attorneys. These attorneys serve large geographical regions, including the continental United States, the Caribbean, Alaska, and Hawaii.

It is the policy of Debt Collection Agency Service United States to work primarily with attorneys who are members of at least one law list. These lists are responsible for independently assessing and bonding potential attorney members, and this ensures that attorneys are committed to collections, getting the job done quickly, and using their experience as a key source of leverage against American debtors. It also ensures that they are the most effective and experienced collection attorneys serving their immediate geographic area or region of the country, and that bodes well for clients of Debt Collection Agency Service US.

Legal System

The United States legal system is divided into 51 separate components, based on the number of states and the territory of Puerto Rico. This 51-part system is further divided into federal courts, district courts, and a number of local and state courts that handle matters of debt collection and judgment enforcement.

Statutes of Limitations

The Statute of Limitations in the United States sets a time period after which a debt cannot be pursued by the creditor or reasonably collected from the debtor. This period of time is not universal, however, and it varies on a state-by-state basis. The shortest Statute of Limitations currently allowed by any state is two years, while the longest such limitation is six years. For those debts involving a written contract, the limitation typically expires after between 3 and 10 years.

Attorney Process

Just like Debt Collection Agency Service United States seeks to make amicable payment arrangements with debtors throughout the country during the first tier of collections, the attorneys we hire for the legal tier of collections are also required to make amicable efforts toward collecting payment of the debt. This good faith effort must be pursued before a lawsuit can be filed in court on behalf of the creditor. Typically, this amicable collection effort lasts only seven days, though some attorneys due attempt amicable collection efforts for as long as 30 days from the time the case is delivered to them by Debt Collection Agency Service United States. The length of this period will also depend on the attorney’s ability to make contact with the debtor.

Attorney Costs and Fees

Unlike many countries around the world, the United States allows collection attorneys to be hired based on a contingency fee plan. This allows any attorneys’ fees to be paid only if, or when, the case has been a success for the creditor in court. This rule is relatively universal, but an exception does apply if the case becomes heavily disputed or if the debtor files a countersuit against the creditor that the attorney is representing. If this becomes the case, the attorney will change their fee structure from a contingency rate to an hourly rate. Often, a retainer will be required to keep the attorney’s services throughout the rest of the case.

In the event that the attorney hired by Debt Collection Agency Service US has made no successful contact with the debtor who is facing legal action, or if the debtor continues to refuse to pay toward the debt’s outstanding balance, our attorney will submit a copy of his recommendations to us for review. These recommendations will feature requirements for the lawsuit to proceed, and will be subject to the approval of the client that we are charged with representing. Typically, the requirements to launch a lawsuit include the payment of court costs, a non-contingent fee for launching the lawsuit, and any out-of-pocket expenses that might be incurred by the attorney while filing and pursuing the case. Additionally, process fees, filing fees, and motions or garnishment fees can be included in this total. These amounts will be refunded when the case is complete.

The non-contingent lawsuit fee charged by most of our attorneys is often up to 5 percent of the debtor’s outstanding balance with the creditor. This amount is credited toward the overall fee of 10 percent charged by the attorney when the case is finished and the funds are collected from the debtor through the use of a judgment and any enforcement methods. It is our job to negotiate with our attorneys in order to ensure the lowest possible fees for our clients. To that end, we typically keep fees very low, especially on cases that total over $10,000 in debt owed the creditor. The non-contingent suit fee is paid to the attorney upon filing the suit itself, and this amount is non-refundable.

Our clients in the United States are required to advance the amount of suit costs to our office before we will authorize our attorney to proceed with legal action against the debtor. This ensures that Debt Collection Agency Service United States does not incur any legal fees for which we cannot be held responsible or reimbursed. It also confirms that our client will be cooperative throughout the entire legal procedure. Suit requirements advanced to us are forward to the attorney on the case, along with documentation proving the validity of the debt.

Filing the Lawsuit

After the attorney has received the suit requirements and the required documentation, a summons and complaint will be prepared and filed with the clerk of the court. All courts do require personal service of these documents on the debtor, and most of these courts further require that such documents be served within 90 to 180 days of being originated by the court itself. If this service is not achieved within the given allotment of time, the court will typically dismiss the lawsuit. Furthermore, if the lawsuit is served outside the Statute of Limitations, the case will be dismissed.

If the debtor is a company and service cannot be performed, the attorney representing the case is permitted to seek leave of the court in order to perform the service himself or herself upon the state’s Secretary of State where the debtor’s business is based. This is not available for individual debtors, however, and does not apply to businesses that are not registered with the Secretary of State.

Proceeding with Litigation and Discovery

After the corporation or individual has been served, they will have a period of time between 20 and 40 days to answer the complaint and return it to the court from where it was issued. This is a wide window of time, but is typically regulated by individual states to be much shorter — often no more than a month.

If the debtor does file an answer to the complaint, the case moves into the discovery phase. This is, by far, the longest part of the legal process when pursuing a debt. This court-mandated period is responsible for researching and proving the debt, and both parties are able to request documents, answers, interrogatories, and requests to admit. Depositions are also allowed during this process, if witnesses are needed to further prove the case. The court can, at its discretion, issue a deadline for the discovery process in order to speed up the trial’s outcome.

Most importantly, the discovery period mandates that each party produce the information that has been requested of them. Failure to do so can result in the court barring all information that has not been produced. It can also result in witnesses being removed from the case if they have not been disclosed to both the court and the other party in the suit. This part of the process is extremely serious and consequential, and it is exceedingly important for both sides to follow state and federal laws during discovery. Failure to do so can seriously compromise the case. Courts can even impose monetary penalties on those who are not timely or forthright in their production of requested documents or witness during the discovery process.

Alternative Dispute Resolution

It’s no secret that America’s courts have a long backlog of cases, and this can make it very difficult to reach a timely outcome of the case. In order to speed up the process, an increasing number of American courts are encouraging the parties involved in a debt collection suit to use the mediation or arbitration processes before a judge can hear a case and proceed to trial. The parties will split the cost of the arbitrator or mediator.

The mediation and arbitration processes are far more informal than traditional trial environments. A third-party arbitrator or mediator will meet with bot parties, or their attorneys, and a few of their witnesses. Both parties will present evidence to the mediator or arbitrator that proves their claim. The mediator or arbitrator then discusses the weaknesses of both sides’ arguments. They will be responsible for making a recommendation about the outcome, as it would occur at trial. If both parties agree, a settlement agreement is drafted by the arbitrator or mediator and submitted to the court.

The recommendation made by the mediator or arbitrator is not binding. Either party can refuse to accept this recommendation and proceed to trial. It should be noted, however, that the party may receive a less favorable result when proceeding to trial; they will then be held accountable for the full balance of the debt as well as any lawyer fees resulting form the trial or from the mediation process.

Obtaining Judgment

Judgments can be obtained through four different methods, each of which typically includes payment of the court costs and any post-judgment interest based on the statutory rate enforced by the court.

If a debtor does not respond to a complaint served to them by the court’s representatives before the mandated deadline has passed, the attorney representing Debt Collection Agency Service United States will file for a motion for default judgment. Depending on how backed up the court’s judges are, this motion can take anywhere from 30 to 180 days to complete. The debtor can vacate a judgment as long as they file the appropriate motion in court. This is typically permitted anywhere from 6 to 12 months after the default judgment has been entered.

Judgments can also be entered if agreed to during a settlement agreement between the creditor and the debtor. This is done through the entry of a consent judgment order. Settlement agreements can also be reached in arbitration and mediation, or during negotiations between attorneys representing both parties. This judgment allows the creditor to request immediate entry of the judgment if the debtor defaults on a prior agreement reached during mediation.

A judgment can also be entered at the end of a trial regarding the payment of the debt. Depending how backed up the court is, obtaining a trial date can take anywhere from six months to five years. This makes such a pursuit very difficult for many creditors.

A summary judgment motion can also be issued, and is considered highly effective. This occurs only in cases where there is no material dispute to the facts of the case as presented by the creditor’s attorneys or representatives. It amounts to a “trial by paper,” rather than appearing in person, but can be hard to complete. Any small dispute of the facts can invalidate the summary judgment process and send the creditor back to square one in terms of collecting and enforcing the debt.

Judgment Execution

After the court has entered a judgment using one of the four methods described earlier, an attorney will record that judgment in the public record. Recording that judgment creates a lien against the debtor’s current property, or any property that they might acquire in the future. This judgment lien will remain valid for between 5 and 25 years, depending on the debtor’s location. Interest does accrue on the judgment from the date it is entered by the court, and this interest is calculated at the state’s statutory rate. Interest will only be charged if the court permits such activity when entering the judgment.

The judgment itself must be served on the debtor through service of process, just like other documents associated with the legal process. At this time, a writ of execution allows the judgment creditor to employ the local sheriff or bailiff to garnish bank accounts or wages, liquidate property or assets, and pursue other methods of execution.

Any costs incurred by the creditor to execute the judgment are the responsibility of the debtor being pursued. These costs can include garnishment fees, keeper fees, bailiff or sheriff fees, and fees associated with seizing and liquidating property to repay the debt.

If the debtor’s assets cannot be located, the attorney hired by Debt Collection Agency Service United States will perform post-judgment discovery to locate those assets. This will include requests to produce financial statements, interrogatories, depositions of principals, and other methods, in order to learn the nature and extent of any assets held by the debtor. If the debtor does not cooperate with this post-judgment discovery process, the court can issue an attachment of the judgment debtor’s principal. The principal will be held in court until sworn testimony is given to the court regarding the debtor’s assets.

Appeal

Appeals can only be filed in cases where a legal dispute exists as to how the judgment was decided and how the legal process was pursued by the court or the attorneys involved.

Bankruptcy

Federal law governs bankruptcy procedures in the United States. These laws prohibit collection activities or litigation relating to a debt while the bankruptcy petition is pending. Additionally, many debtors now file “no asset” bankruptcies that involve a sworn statement describing the debtor’s lack of enforceable assets. Creditors cannot file claims during a “no asset” bankruptcy unless a bankruptcy trustee locates assets held by the debtor. If that does happen, creditors will be informed as to the value of those assets and they will be encouraged to file a claim against the debtor. A dividend will be issued within 12 to 24 months after this claim has been filed and accepted.

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Debt Recovery Services for USA

Debt Collection Agency Service United States maintains two tiers within its American collection process.

The legal collections process involves the filing of a lawsuit against the debtor. This will allow us to pursue only the outstanding balance of the debt, unless an agreement exists between the creditor and debtor that allows us to pursue any interest and collection costs that were incurred before the judgment, as well as any attorneys’ fees that should be paid by the debtor.

The staff of our debt collection agency is trained to retrieve money from customers that are hard to deal with; we will contact the debtor using our strong but diplomatic techniques and make sure your unpaid accounts are quickly sent to your bank account.

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Here below you will find a detailed explanation on how we collect debts and both amicable and legal steps we are following.

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Please contact us using our placement form without waiting further and get your free quote today.

We usually contact the debtor the same day of account placement.

Placing your file early will increase the success rate!

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1.1 Amicable Phase

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1.1.1 General

Upon the failure of the amicable phase of collections, Debt Collection Agency Service United States will immediately proceed to the legal phase of the process.

Legal System

Statutes of Limitations

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1.1.2 Local agent

We maintain direct contact with all of our debtors, and our clients, at all times. While we maintain this contact whenever possible, it is sometimes required of us to use LDC contacts in Canada in order to assist the collections process and make it more effective. Local regulations prohibit us from visiting debtors in person, however.

1.1.3 Interest

Laws and regulations passed by the national Canadian government do not permit companies, or debt collectors, to attach interest to an outstanding debt. However, this regulation can be superseded by any agreement between our client and the debtor that stipulates the addition of interest to an existing debt once it has been placed for collection. If this is the case, that interest — and any other costs — can be added to the total debt that we are trying to collect. It’s worth noting, however, that the Criminal Code of Canada prohibits the collection of interest over 60 percent and declares such a practice to be a crime.

1.1.4 Debt collection costs

Canada’s laws and regulations, as they pertain to debt collection, prohibit the attachment of any costs to the debt that might be imposed by the company or their collection agency. Accounts Receivable Canada adheres to this law, but is allowed to collect costs when such a possibility has been outlined in the terms and conditions set forth by our client and agreed to by the debtor.

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1.2 Legal Procedures

1.2.1 General

The commercial laws that regulate debt collection and recovery in Canada are left up to each province or territory to decide. When it comes to bankruptcy, insolvency, and matters of the Canadian currency, however, federal jurisdiction reigns supreme. All of Canada’s provinces and territories, except Quebec, are governed by a common law system that originated in Great Britain and is based on that country’s laws. Quebec maintains a different system, instead based on the civil law system that can be found in France and several other European countries.

1.2.2 Required documentation

Beginning legal action can only be done when Accounts Receivable Canada has received the proper documents from the client to support their claim. That includes any documents that might be relevant to the dispute, including contracts, statements, and terms or conditions of the original lending product. Each of these documents must be in English or French; they must be verified and authenticated by a Notary in order to be permissible. For documents translated from another language, an expert must be on hand to certify their authenticity.

Our canadian debt collection agency team does require up-front security costs that will help to ensure our own company’s financial integrity in the event that the client loses their case and the debtor wins theirs. Witnesses may be required for the trial, and can appear in person, via videoconferencing, or via telephone. These requirements do very between provinces and some exceptions or additions may be needed in some cases.

1.2.3 Procedure for legal dunning

An attorney, largely to help our clients reduce costs, carries about the legal dunning procedure. Our Canada based debt collection office will select an attorney who will attempt both verbal and written forms of communication with the debtor in question. These activities will occur within state and national laws and regulations, and will be a part of the amicable phase. This part of the process may include payment arrangements and discussions of a settlement to eliminate the debt. If such conversations fail, the attorney hired by our Canadian debt collection agency will engage in due diligence when determining the future course of action as it relates to the debt. Those courses of action will recommended to our debt collection agency and to our clients.

1.2.4 Lawsuits and legal proceedings

Moving into the lawsuit phase of the collection process can occur in one of two ways. First, it may occur if amicable collection efforts have simply failed, and the company has not recovered the amount that is owed by the debtor. Second, it may occur after the completion of the legal dunning procedure if the debtor has appealed any actions taken by the attorney therein.

The legal process surrounding a lawsuit can sometimes be a long one, lasting anywhere from a few months to several years. This is largely because each of the provinces and territories of Canada have different legal procedures, different laws and regulations for debtors, and varying senses of urgency as it relates to debt collection. Many provinces require extensive discovery procedures before the trial can begin, and this can set the timeframe back quite a bit. Still other provinces and territories have the ability to request settlement conferences throughout the legal procedure, further stymying efforts to reach a quick decision.

1.2.5 Costs of legal proceedings

Legal proceedings in Canada can be a costly move for clients to take. Accounts Receivable Canada estimates that legal costs in each of the territories and provinces within Canada start at around 450.00 CAD, with the ability to quickly rise to as much as 6,000.00 CAD. These costs don’t generally include the added expense of witnesses, experts, and others who might be key to the case’s success. Those things will further increase the cost of litigation for the clients who choose our debt collection agency. In all, those clients considering legal proceedings should be prepared to pay as much as 1,700.00 CAD to initiate the process. An estimation of these legal costs will be performed by Accounts Receivable Canada before the procedure is started, allowing clients to determine whether or not the procedure is worthwhile.

1.2.6 General timeframe

A legal dunning process usually takes between two and three months to complete. Court proceedings, on the other hand, often take at least a year to finish. More complex cases will tend to take longer, and clients could be waiting several years for the issue to be resolved in its entirety.

1.2.7 Costs of Legal Proceedings

The victory in any court case involving a debt will be entitled to recover the cost of court fees, expert and witness testimony, document copying costs, and some portion of travel costs. However, most costs associated with travel and witnesses are not eligible for full recovery. In fact, some provinces and territories specifically state that such costs cannot be recovered at all, by either side of the legal proceeding. Some provinces and territories do allow for the recovery of attorney’s fees for the case, as well as any administrative charges associated with the process. This is usually subject to special regulations and provisions set forth by the local government.

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Whatever the debts reason, we will work it, fast.

As debt recovery agency, we’ve seen of the disputes and excuses debtors say when they fail to payback our Clients.
We know how to rreply and negotiate, using the right level of pressure and get you paid quickly.

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1.3 Insolvency and Bankruptcy Proceedings

The process of claiming financial insolvency is handled by Canada’s federal Bankruptcy and Insolvency Act. The Superintendent of Bankruptcy administers the act itself. This is done at a federal level, in court, rather than in the provincial court systems. Only a certified Trustee, as declared by the Superintendent of Bankruptcy, can handle the proceeding.

1.3.2 Bankruptcy Proceedings
There are four distinct bankruptcy options to clients and debtors in Canada. They include:

1.The Proposal

A proposal is drafted and agreed upon by the Trustee; it is then submitted to creditors in an attempt to settle any outstanding debts before a discharge is pursued or granted.

2. Bankruptcy Filing

This is the traditional discharge and liquidation process. An individual or company liquidates their assets to pay off their existing debts. Secured creditors are the first ones to have access to the liquidation funds. Unsecured creditors are given second priority. The creditor must file a claim with the Trustee in order to be entitled to any portion of the bankruptcy’s liquidation funds.

3. The Receivership Process

For corporate interests, a secured creditor will take control of the company’s assets during the insolvency process. An audit will be completed; when it is complete, the company can operate either under receivership or they may petition for a full-fledged bankruptcy proceeding.

4. Company Creditors’ Arrangement Act

The CCAA allows for a compromise to be established between an insolvent corporate entity and its unsecured creditors. This court-ordered process can last for several years at a time.

3. The Receivership Process

1.3.3 Required documentation

In order to file an insolvency claim for our clients, Accounts Receivable Canada needs the following documents:

- A Power of Attorney declaration
- Copies of any company invoices or contracts
- Copies of any orders or deliveries to the premises
- General condition of sale documents, if applicable
- Copies of relevant correspondence that may help the claim’s success

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1.3.4 Expected timeframe and outcome

Deadlines relating to bankruptcy and insolvency proceedings in Canada vary between the country’s provinces and territories. That being said, however, the general time frame of completion for such procedures is typically between one and three years.

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Debt Collections In USA, How it Works

USA

Debt Recovery Services for USA

Please contact us using our placement form without waiting further and get your free quote today.

We usually contact the debtor the same day of account placement.

1.1 Amicable Phase

1.1.1 General

1.1.3 Interest

1.1.4 Debt collection costs

1.2 Legal Procedures

1.2.1 General

1.2.2 Required documentation

1.2.3 Procedure for legal dunning

1.2.4 Lawsuits and legal proceedings

1.2.5 Costs of legal proceedings

1.2.6 General timeframe

1.2.7 Costs of Legal Proceedings

Whatever the debts reason, we will work it, fast.

1.3 Insolvency and Bankruptcy Proceedings

1.The Proposal

2. Bankruptcy Filing

3. The Receivership Process

4. Company Creditors’ Arrangement Act

3. The Receivership Process

1.3.3 Required documentation

1.3.4 Expected timeframe and outcome

"Don't tell people your plan, show them your results"

Whatever the debts reason, we will work it, fast.

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