Managing non-payment in industrial equipment trade with China can be a challenging task, especially when dealing with recovery systems and litigation. This article provides insights into a recovery system for company funds and litigation recommendations in such scenarios.
Key Takeaways
- Implement a 3-phase Recovery System to recover company funds efficiently.
- Consider closure of the case if recovery is unlikely after thorough investigation.
- Be prepared to pay upfront legal costs if proceeding with legal action.
- Understand the competitive collection rates based on the number of claims submitted.
- Expect daily attempts to contact debtors for the first 30 to 60 days during the recovery process.
Recovery System for Company Funds
Phase One
Upon initiation, immediate action is taken to recover funds. Within the first 24 hours, a multi-channel communication strategy is deployed, including the dispatch of the initial demand letter. The debtor’s information undergoes a thorough skip-tracing process to ensure all contact and financial details are up-to-date.
Daily attempts to engage the debtor are made, utilizing phone calls, emails, and other methods to negotiate a resolution. This aggressive approach is maintained for 30 to 60 days, aiming for a swift recovery.
If these efforts do not yield results, the case transitions to Phase Two, involving legal escalation. The focus remains on recovery, with a clear pathway outlined for proceeding:
- Initial demand letter sent
- Skip-tracing and investigation
- Persistent daily contact
- Evaluation after 30 to 60 days
The goal is to resolve the matter before legal intervention becomes necessary, saving time and resources for all parties involved.
Phase Two
Upon escalation to Phase Two, the case is transferred to a local attorney within our network. Immediate action is taken to draft and send a series of demanding letters on law firm letterhead. Concurrently, the attorney’s office initiates direct telephone contact with the debtor.
If these intensified efforts do not yield a resolution, a detailed report is provided to the client outlining the challenges encountered and suggesting viable next steps.
The following table summarizes the attorney’s actions during Phase Two:
| Action | Description |
|---|---|
| Letter Drafting | Drafting and sending demanding letters |
| Telephone Contact | Initiating calls to the debtor |
| Case Review | Assessing the case for further recommendations |
Should these measures fail to secure payment, the pathway to Phase Three is paved, where critical decisions regarding litigation or case closure are made.
Phase Three
Upon reaching Phase Three, the path forward hinges on the feasibility of fund recovery. If prospects are dim, we advise closure of the case, incurring no fees. Conversely, choosing litigation necessitates upfront costs, typically $600-$700, for court proceedings.
Deciding against legal action allows for withdrawal or continued standard collection efforts without additional charges.
Should litigation commence, we pursue all owed monies, including filing costs. Failure to recover funds post-litigation leads to case closure, free of any financial obligation to our firm or affiliated attorneys.
Our fee structure is clear and competitive:
- For 1-9 claims, rates vary from 30% to 50% of the amount collected, based on the age and size of the account.
- For 10 or more claims, the rates range from 27% to 50%, again depending on specific claim details.
These rates ensure that our interests are aligned with your success in recovering outstanding debts.
Litigation Recommendations
Closure of the Case
When the recovery of funds hits a dead end, closure of the case may be the most pragmatic step. This decision follows a comprehensive assessment of the debtor’s assets and the likelihood of successful recovery. If deemed unfeasible, the case is closed with no additional cost to your company.
In instances where recovery is improbable, ceasing further action avoids unnecessary expenditure and allows for a strategic reallocation of resources.
The closure does not signify defeat but a calculated choice to optimize financial outcomes. Below is a summary of the closure process:
- Thorough investigation of the debtor’s financial status
- Evaluation of the potential for successful fund recovery
- Final recommendation for case closure
- No further obligations or fees for your company
It is essential to approach each case with a clear understanding of the risks and potential rewards. The closure of a case is not the end but a pivot towards more viable opportunities.
Proceeding with Legal Action
When the decision to pursue litigation is made, it’s crucial to understand the financial commitment involved. Upfront legal costs are a necessary expenditure to initiate the legal process. These costs, which typically range from $600 to $700, cover court fees, filing charges, and other related expenses. Upon payment, our affiliated attorney will file a lawsuit to recover all monies owed, including litigation costs.
Success in litigation is not guaranteed, and if efforts to collect fail, the case will be closed with no further obligation to our firm or attorney. However, should the litigation result in recovery, our competitive collection rates apply:
- For 1-9 claims, rates vary from 30% to 50% of the amount collected, depending on the age and size of the account.
- For 10 or more claims, the rates range from 27% to 50%.
It is essential to weigh the potential recovery against the costs and risks associated with litigation. A clear understanding of the financial implications will guide you in making an informed decision.
Frequently Asked Questions
What is the Recovery System for Company Funds?
The Recovery System for Company Funds consists of three phases: Phase One involves sending letters to debtors, skip-tracing, and contacting debtors for resolution. Phase Two includes forwarding the case to an affiliated attorney for legal action. Phase Three involves either recommending closure of the case if recovery is unlikely or proceeding with litigation if recommended.
What happens if recovery is not likely in Phase Three?
If recovery is not likely in Phase Three, the case may be recommended for closure, and the client owes nothing to the firm or affiliated attorney. Alternatively, litigation may be recommended, and the client can choose to proceed with legal action by paying upfront legal costs.
What are the upfront legal costs for proceeding with legal action?
The upfront legal costs for proceeding with legal action include court costs, filing fees, etc., typically ranging from $600.00 to $700.00, depending on the debtor’s jurisdiction.
What are the collection rates for DCI based on the number of claims submitted?
DCI provides competitive collection rates based on the number of claims submitted within the first week. Rates vary for different categories such as accounts under 1 year in age, accounts over 1 year, accounts under $1000.00, and accounts placed with an attorney.
What actions are taken during Phase One of the Recovery System?
During Phase One, letters are sent to debtors, skip-tracing and investigation are conducted to gather debtor information, and attempts are made to contact debtors for resolution using various communication methods.
What happens during Phase Two of the Recovery System?
During Phase Two, the case is forwarded to an affiliated attorney who sends demand letters to the debtor, attempts to contact the debtor, and provides recommendations for further steps if resolution is not achieved.
