Legal Ways to Collect a Debt


If you run any type of business or enterprise that involves collecting payments from clients, there may come a time when one such client owes a debt to you that they don’t pay. No matter the amount, if the debt in question is legally owed through some form of contract or agreement then you have several options to legally collect it. Some methods require some payment or work on your part, but if you intend to take action to collect the outstanding debt, they are still your best options.

Debt Collector

A debt collection agency is a third-party company that specializes in collecting outstanding debts. You are essentially outsourcing the debt to the agency and allowing them to continue pursuing its payment. There are a multitude of laws and procedures that debt collectors must follow and, as such, you can be assured that the debt will be obtained legally and usually without much further input from you. The downside is that debt collection agencies commonly charge a large fee for their services, costing you a considerable percentage of the collected debt.

Claims Court

Small claims court is a viable option of collecting debt if the amount owed is relatively small. Each state has its own laws regarding the maximum amount you can seek to collect in small claims court, so depending on the size of the debt, this option may not apply at all. The benefit to small claims court is that you don’t need to hire a lawyer and, in general, your expenses will be fairly low. Fees will be applied to file the necessary paperwork, but the process to do so is fairly straightforward and simple. The court will typically assist you in filling out all necessary forms and will set a court date. You will need to provide evidence and documentation proving that a debt is owed to you, but if you are able to do this then you may consider small claims court because of the speed with which the cases are heard and decided. Should the court decide in your favor and order payment of debts owed to you, you will then have additional forms to file in order to ensure proper collection of the debt. These forms will signify that you are legally owed the debt under court order, and should that debt still not be paid as agreed it will authorize you to collect it by either garnishing wages of the debtor or by seizing their property. Should these options come into play, having the proper forms filled out following a small claims ruling will also authorize the court to assist you in moving forward with those next steps of debt collection.


Mediation is typically a more cost-effective and informal way to pursue a debt than taking court action. In mediation, the two parties involved in the debt collection discuss the case while under the supervision of a mediator, who acts as a third party to help reach a conclusion. This method allows you to talk with your debtor and possibly reach some payment plans or amicable terms regarding payment of the debt. The mediator is there to help move the talks forward and assist in the proceedings, but the agreements to be reached depend fully on the two sides. Therefore this method works best if you still have some form of decent communication or relationship with whoever owes you an outstanding debt.

Property Lien

A property lien is another method of collecting a debt and is often used when the debt owed is both substantial and long past due. Obtaining a property lien requires the services of a lawyer as it can be a legally involving process. Filing a lien against a debtor's property essentially means that you are gaining control of that particular piece of property until the debt is repaid. The property can be anything, such as a car or a house and is usually about the same value as the debt owed. At this point the owner of the property, that is the person who owes you the debt, will not be able to sell, finance or otherwise engage in monetary activity with that property until the debt is repaid. This ensures that you will eventually be repaid, however it does not guarantee a specific time line for that to happen.

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