Collecting on bad debt is never as simple as it sounds, especially with commercial debt. Even once you have a judgment in hand, many debtors still do not pay willingly. You may need to identify assets yourself in order to claim them for debt payment. One type of asset may be the debtor’s own accounts receivables. If a third party owes them money, you may be able to reach across to that third party and apply their debt to your judgment.
This remedy can be effective in situations where your debtor looks like they have no assets on their books until you dig deeper. You must show the courts the following.
- You have a legitimate claim against the debtor.
- The debtor has accounts receivable from another party.
In order to meet these requirements, you will likely need the help of aggressive, experienced commercial collection attorneys like those at Law Offices of Alan M. Cohen & Associates LLC. We have been assisting clients with complex collection cases for nearly 50 years.
What kind of debt can you use it for?
Although you can use a reach and apply injunction for many types of debt, you cannot use it in all circumstances. The key for this type of injunction is that you know of third-party debt owed to your debtor. Your injunction may not cover the entire debt, so you may need to use it in combination with other collection efforts. Common situations where reach and apply injunctions are useful include:
- In combination with other pre-judgment or post judgment attachments
- For nearly any type of business, as long as you can identify that they have accounts receivable
- Where the accounts receivable take forms other than cash, such as business interests or real estate
You cannot, however, use this process to collect on a mechanic’s lien. Those require a separate legal process.
When can you use a reach and apply injunction?
You may request a reach and apply injunction as either a pre-judgment or post-judgment attachment. At Law Offices of Alan M. Cohen & Associates LLC, we prefer to identify payment assets before the judgment hearing. You will have a limited amount of time to execute your judgment and having your enforcement method ready to go will save you time and effort, not to mention possibly getting you paid faster.
On the other hand, many clients come to us after receiving their judgment, but also after frustrating and unsuccessful attempts to either collect on their own or with another attorney. In that case, we may pursue a post-judgment reach and apply injunction if appropriate and useful.
Experience counts when it comes to collections
Reach and apply injunctions are not for the novice collections attorney. At Law Offices of Alan M. Cohen & Associates LLC, we have been helping Massachusetts companies with corporate collections matters since 1994. Our attorneys have nearly 50 years of experience using the skills needed to get the job done. For more information, call our office at 508-763-6604 or reach out online.