How to Sue Someone for an Out-Of-State Debt
Doing business with people or companies out of your locality can present dangers when they refuse to pay. Simply sending letters or calling them may not motivate them to pay you and you may be left with no other alternative than to file a lawsuit against them. This can be an expensive proposition in both time and money and still might result in you not getting paid, but the alternative is doing nothing and definitely not getting paid.
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Things You'll Need
- Computer with Internet connection
- Telephone
- Documentation of the debt (statements, invoices, proof of delivery)
Instructions
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Send a letter to the debtor in the other state warning that you intend to sue them for the unpaid debt. This is called a demand letter. You can include a time limit for payment if you like, but if the debtor has waited this long, giving them another 15 days to pay is not likely to motivate them to pay.
The demand letter just states your side of the case--that you sent goods or services to the debtor and they have not been paid for. Include all late fees and interest (if you charge them) in the total. If the debtor pays you based on the demand letter, you do not have to sue them.
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Search the Internet for a collection law firm in the same city as the debtor. Make sure the firm is established and has been doing this sort of specialized practice with some success. It is better to have a law firm handling your collections that is local to the debtor because such a firm will be familiar with their state laws for collection.
The law firm will charge you either a flat fee or a percentage of what they collect. Ask for a fee structure before you engage them. You will probably have to pay for all the court filings and fees separate from the lawyer's fees.
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Get a court judgment in your favor. The law firm will present your case to the court and the court will decide either in your favor or in favor of the debtor. When the court decides in your favor, that means the court acknowledges that the debtor owes you and that you have the right to collect the debt. However, the court will not actually collect the debt for you.
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Instruct the law firm to execute the judgment of the court. This simply means to collect the account using the judgment. A lawyer can now send the local law enforcement (usually the sheriff) instructions on how to garnish or seize bank accounts, or garnish wages if it is an individual, to satisfy the debt.
You can help your cause by always photocopying checks sent to you by customers and keeping them in a customer file. That way you will have their banking information if the check is bad, or if future checks written by the same customer are no good.
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Tips & Warnings
Get good credit information before you do business with customers to determine if they are likely to be a collections problem. Credit applications and credit reports can help you avoid wasted time and money in court by helping you determine who is a good credit risk and who needs to pay you up front.
If you seek a legal opinion, please ask a qualified lawyer.
