Does Your Customer’s Personal Guarantee Protect Future Transactions?

Image of a hand signing an agreement to represent a personal guarantee.Many small business owners form corporations and limited liability companies to personally insulate themselves from the obligations and debts of their business. Requiring the owner or officer of a company to enter a personal guarantee provides protection against the insulation a corporation or limited liability company provides.

Many companies who sell products, especially on credit, require their corporate customers to execute both a credit application and a personal guarantee. With a signed guarantee, the seller has recourse against the owner/guarantor should they default on payment.

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Extending the Statute of Limitations in New York Debt Collection Cases

A stopwatch with the word deadline to represent Extending the Statute of LimitationsWorried it’s too late to bring a debt collection case? Don’t be. There are many ways to extend or toll the statute of limitations for New York debt collection cases. Successfully extending the statute of limitations, can afford you more time to start your case.

The statute of limitations is the length of time allowed to file an action. The time varies from state to state and is set by state legislation.

It is not always possible for a creditor to pursue legal action within the applicable statute of limitations. When that happens, it’s imperative to know the ways New York allows you to extend the time for pursuing legal action, known as tolling the statute of limitations.

News York offers several ways to toll the statute of limitations.  Here are the most pertinent ways that relate to debt collection:

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Acknowledging a Debt in Writing Can Extend Time to File a New York Debt Collection Case

Hourglass representing Extend Time to File a New York Debt Collection case.Having your non-paying client acknowledge their debt in writing can extend your time to file a New York debt collection case. If the writing signed by your client contains the necessary elements, it may extend the time for you to file past the allowable statute of limitations.

New York CPLR Section 201 details the length of time to file actions within New York. The allowable time to file an action, what’s known as the statute of limitations, depends on the underlying cause of action.

The allowable time during which you can file the action for debt collection claims is determined by the underlying cause of action — whether there were services rendered or goods sold and delivered. The types of services will further affect your available time to file. For example, New York recently reduced the time for some medical providers to file debt collection cases to three years.

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Are Emails and Letters Sufficient Demands for Payment on a Promissory Note?

Envelopes to represent Demands for Payment Promissory Note.Your company lends a borrower $100,000.00 and issues a promissory note to that effect, payable within two years. The note is straightforward, containing between 10 and 15 paragraphs of terms. After two years, you email the borrower asking for payment. The borrower responds to your demands for payment on the promissory note saying they will pay but never does. You fax the borrower a letter demanding payment of the $100,000.00 plus interest. The debtor responds saying they will pay but again doesn’t. While suing the borrower in court may seem like the obvious next step, suit may be premature if the note contains a notice clause with stated requirements.

Many agreements and stipulations executed by parties contain a notice clause specifically indicating the method parties must adhere to when providing notices or demands. Promissory notes frequently require notices to be in writing and either made by personal delivery or by registered or certified mail with a return receipt to ensure proof of delivery.

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