NY Debt Collection Litigation: Can Suing Push a Nonpayor to Pay?

NY debt collection litigation may get your nonpaying customer to pay just by filing suit.

If you knew statistically that filing NY debt collection litigation would cause your customer to pay, would that help you decide to advance costs and proceed with a suit?

New York amended its civil practice rules about 10 years ago. For instance, they now require filing a summons and complaint with the court and payment of the necessary fee. That’s when the court system assigns an index number – only after the attorney files papers. The nonpayor gets the bad news when the papers arrive detailing the specifics of the lawsuit.

NY Debt Collection Litigation Before the Rules Changed

It wasn’t always like that.

Once upon a time, parties served their NY debt collection litigation papers on delinquent customers before filing the papers with the court. This process allowed debt collection attorneys to prepare summons and complaints and send them to commercial nonpayors. This was a preview of coming attractions if they didn’t pay up.

As you may or may not know, I have maintained a New York debt collection practice for 30 years. Because of that time and experience, I have learned a lot. I know that 23- 25% of nonpaying commercial debtors pay once someone sues them. Once some nonpayors know a lawsuit was filed against them, they’re ready to talk payment arrangements or settlements.

The reason may be the filing of the public action alerts others that they are nonpayors. That can affect the company’s credit rating and more. The bottom line is that lawsuits pressure 25% of nonpaying commercial customers to pay up.

Under the old system, nonpayors who resolved the case before the filing of the summons with the court saved the filing fees. The court did not receive a fee for the filing of the summons and complaint. The nonpayor didn’t have to pay that court cost.

It may be for this economic reason that the New York court system changed the process. Now creditors have to file the summons and complaint and pay the fee before issuing the summons for service. That means the court earns money generated by the fees. It also means the loser pays the court costs.

NY Debt Collection Litigation is Not Always the Answer

NY debt litigation does not make sense for all nonpaying customers. Before filing a claim, assess the claim’s collectability. Be certain you are creating an opportunity to prevail. It’s important to make that decision intelligently. Why throw good money after bad?

We are here to help you decide whether proceeding with debt collection litigation is right in your case. Call us for a consultation on your debt collection issues or any matter concerning getting paid. We can even show you how to position yourself so that you’re less likely to have to file suit in the first place. Reach us by email or phone (212) 686-0100.