Frequently Asked Questions

Q: I work in the accounts receivable department of a company which ships products out nationwide (and internationally). When customers don't pay, can we sue them in our state, or do we have to hire a collection lawyer where the customer is?

A: There is no simple answer to this question; it depends on the situation. First, if you are selling to "consumers" for their household needs (as opposed to businesses), the Fair Debt Collection Practices Act would require you to bring the suit in the county where the customer is located, or where the customer signed the contract. Failure to do so would be risking a counterclaim against you for "forum abuse," which is defined as forcing someone to defend a claim in a jurisdiction where they have no or minimal contact.

As a practical matter, it is often advisable to file a lawsuit where a business is located, also. This is because their assets are usually located where they are, and not where you are. The advice may change if your non-paying customer is a business with assets located nationwide. You could also try to bring the case locally and see if the customer does not object to your state having jurisdiction. Then, if you obtained a judgment in your state, you could transfer it to the state where the customer does have assets. Although this becomes a two-step process (and, often, a two-attorney process as well), the advantage is that if it works, you would not have to send a witness to appear in the court where the customer is located.

Q: Isn't hiring a debt collection professional expensive? Shouldn't I just write off my bad debts?

A: Speaking for our company, I don't perceive the costs of hiring a lawyer to be unduly expensive. The vast majority of cases can be handled on a contingent fee (percentage) basis. You would additionally be responsible for payment of court filing fees, fees for service of papers and other out of pocket fees. These out of pocket fees rarely exceed $300 in most cases involving under $25,000 which our firm handles.

As far as "writing off" the bad debt, I advise against giving up so easily for several different reasons. One of which is that failure to pursue your delinquent accounts receivable is not only costly to you, it may make you an "easy mark" for unscrupulous customers who look for easy credit terms and lax enforcement of payment terms. Another is simply that the IRS is purposefully unclear on eligibility for writing off bad debts. Their operative test is "no reasonable prospect for recovery." In some instances, this standard can and has been interpreted to mean that a lawsuit must be brought if the prospect of recovering even part of the bad debt is "reasonable." The biggest problem is that if a deduction for bad debt is disallowed by the IRS, it is often done several years after the fact, at a point in time where a lawsuit is likely outside the statute of limitations. If this happens, you lose the deduction, and you can lose the opportunity to recover from the customer because too much time has elapsed.

Q: What can we do if our customer goes bankrupt?

A: First, let me explain what you can't do. You can't pursue collection from them (and you can't hire anyone to pursue collection from them) except through the bankruptcy court. You can't bring a lawsuit against them (except through the bankruptcy court) and all pending actions against them (except in bankruptcy court) are "stayed," that is, postponed indefinitely until the discharge is granted or the case is dismissed. This relief to the party filing for bankruptcy protection is known as the "automatic stay."

What you can do is assert your claim through the bankruptcy court. You should not automatically assume that bankruptcy means no chance at collection, although, as a practical matter, for many, if not most unsecured creditors, bankruptcy will likely cause one or more of the following: 1) a delay in collecting funds; 2) a reduction in the amount of funds that can legally be collected, and 3) in some cases, an elimination, by court order, of the debt in its entirety ("Discharge").

What our professional experience can do for creditors in this situation is to review your file, at no initial cost, to determine whether our intervention is warranted. If you choose to use our services, we will propose a specific plan of action and a fee schedule. You may then decide how you wish to proceed.

Q: Does your service have any hidden fees or charges?

A: NO. Simply put, if we don't collect your debt, you owe us nothing. We have no hidden costs, fees or other charges you need to worry about.

Q: How much do you charge?

A: Virtually all collections are done on a percentage basis. Rates start as low as 25% of the debt. For example, if we collect a $1,000 debt on your behalf, you will receive $750.00. If you want to work out different types of fee's, just ask. We are open to many different options.

Q: What cities do you cover?

A: Our company works mainly in Pennsylvania.However, through our network of legal and collection specialists, we are able to offer coverage almost ANYWHERE in the WORLD!

Q: Do you offer discounts for multiple accounts?

A: YES! Submit 5 or more Business to Business accounts on your initial placement and your rate will be 25% no matter what the age of the accounts are! Please note that accounts MUST be in business at time of placement.

We make the entire process easy! Simply Contact Us!

Call Us Toll-Free: 800-477-2775 (APPLE)
Local Calls: 412-682-1466
Fax to: 412-682-3138
Emails to: japple@applelawcollects.com

*None of the contents of this site should be taken as legal advice for any specific matter. Contact us or your attorney !