Assume you have a client who owes you $10,000. You have a signed contract from the debtor as well as a personal guarantee. The signed documentation clearly demonstrates both the corporate debtor and the guarantor are responsible for the debt. However, statements provided to the debtor and the guarantor make the amount they owe unclear. Unfortunately, your poor billing practices might complicate your debt collection endeavors. So how can you obtain a judgment for the amount due against the debtor and the guarantor?
In the New York court system, under the circumstances above, the court may hold what is known as a “bifurcated trial.” Bifurcated trials are more prevalent in torts claims than contract claims, but they can occur in contract actions. In this type of trial, the court first holds a trial to determine the defendant’s liability. After liability has been ruled upon by the judge or jury, the court will hold a second trial to decide the amount of money the defendant owes the plaintiff. This amount is known as damages. This is different from a “unified trial” in which the court rules on both liability and damages in the same trial proceeding.
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The COVID-19 pandemic has changed the ways clients can testify at trial in New York courts. If you are planning on testifying at a debt collection trial, here’s what to expect.
If you are worried about the hassle of traveling to and from court, don’t be. All debt collection trials are now conducted remotely. For now, you don’t have to worry about appearing in person. If however, you requested a jury trial, your case will not go forward at this time. All jury trials have been postponed until further notice.
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Facing an inquest as part of your debt collection case? Knowing how to prepare for an inquest is crucial if you want to recover the most money in your debt collection case.
There are two main components you’ll need to prove in your debt collection case: liability and damages. You must prove both of these in order for the court to award a judgment in your favor.
First, you will need to prove that your non-paying customer is legally obligated to you. This is done by proving the parties had a binding agreement. Agreements are not always a written contract, however, you would have to prove there was an agreement for the goods and services to be sold, loan to be made, and that the party failed to pay.
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You completed your end of the deal but when it came time to pay your customer did not. After repeated invoicing, the customer finally offers to settle the balance due in writing but does not pay. Now that you are enforcing your right to collect and pursuing “legal” options, the debtor has changed their tune. Your non-paying client is now defending the debt collection case you brought against them. The debtor has also included sham counterclaims claiming the services or goods were defective.
How is this possible given their previous offer to settle? Isn’t the mere fact that they offered to pay proof they owe the money? It depends.
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