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What are you legal options when an invoice goes unpaid?

Regardless of the type of business you run, the odds are that you are in it to make a profit. You provide goods or services to your customers in exchange for payment. While this contractual arrangement seems simple enough, when a customer fails to keep up his or her end of the bargain, things can become complicated. You need to take swift action to collect fair payment.

If you determine that your customer is either unwilling or unable to pay the debt owed to your company, you need to know what actions you may take. Learning how to legally secure payment can make or break many businesses.

Try straightforward measures first

More than likely, your first inclination will be to try to work out the situation amicably. It may take a simple reminder letter or phone call to receive payment. If that doesn't work, you could try sending a demand letter or turn over the account to a debt collection agency.

However, you need to tread carefully. Any action you take must comply with the Fair Debt Collection Practices Act that provides debtors with certain rights and prohibits certain activities by creditors. Before acting, it may be worthwhile to gain an understanding of your rights and responsibilities as a creditor under the act.

When to turn to the courts

If amicable measures fail to secure payment, you may need to turn to the courts for assistance. Before doing so, you may want to determine whether taking legal action best serves your interests. You may conduct a cost/benefit analysis to that end. If the benefits outweigh the cost, time and effort that litigation or other legal actions require, then you may want to proceed.

If you provided goods to the debtor, and you believe that the property subject to the debt owed to you could be destroyed or otherwise disposed of, you may consider an attachment or replevin action. These pre-judgment efforts require an order from a Florida civil court, which will more than likely require a hearing. If approved by the court, you may take possession of the property.

Regardless of whether you take this step, you may file a lawsuit against the person or company that owes you the debt. If you receive a judgment, you can then use post-judgment collection efforts to obtain payment for the debt. Throughout this process, you will likely face numerous legal challenges. While asserting your legal rights, you also have legal obligations to meet. Understanding what those obligations entail could help ensure that you receive the justice you deserve.

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