New York Debt Collection: Customer Failed to Pay. Do the Goods Still Belong to Me?

Goods were sold to your customer, delivered as specified. The goods were sold on terms which were not honored. You did not retain a security interest in the goods. Despite attempts to collect, the customer has failed to pay.

 

Because the customer’s didn’t pay, you believe the goods belong to you. You want them back.

This issue comes up all the time.

There is a flurry of activity especially when retailers and distributors are winding down. Buyers not paying for goods and the actively selling the goods before or during liquidation. Because these customers are closing their doors owing monies to a secure lender for a debt they can’t satisfy, chances of collecting with a debt collection case is unlikely.

Looking around New York and elsewhere we see it before our eyes. We have received many calls from creditors of Gracious Homes, a well known retailer in NYC with several locations. A few months ago it was Scoop NY and Nomorerack dba Choxi. The list of retailers and distributors going out of business is endless.  

Acknowledging that the debtor will not pay for the goods, you demand immediate return of the goods. Arguably, since payment was not made the customer has no right to possession or to attempt to sell them. Or can they?

According to the Uniform Commercial Code (UCC) once goods sold that to are delivered to a specified location (debtor’s location, an agent, shipper (FOB), title passes to the buyer. This is true regardless of payment by the buyer.

The bright spot in all this is that if the buyer properly rejects/revokes acceptance of the goods, title passes back to you as seller. If you will accept that payment will not be made and, if the buyer will cooperate and timely revoke acceptance, you can regain title to the goods.

Regaining title will allow you to sell to another buyer and recoup some of the monies lost on the sale. You will be as whole as you can be from the underlying transaction with a debtor that is being liquidated. If the customer does not voluntarily return the goods, you need to have a New York debt collection counsel go in and ask the Court for an Order of Seizure.

The application to the Court (very similar application made when you have a security interest in the goods) itemizes the inventory that belongs to you and if approved by the Court allows you or your principal to go in and seize the goods.

If you are owed monies or wish to protect yourself in the sales phase, contact Frank Frank Goldstein Nager for a free consultation. You can email Jocelyn Nager at  jnager@ffgnesqs.com or call 212-686-0100 ext 12. We have the experience that pays…

Share It