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Credit application: 3 important provisions

On Behalf of | Aug 1, 2022 | Aggressive Collections

A credit application can be a valuable tool for businesses. This legal device allows the business to extend credit to customers. Although this tool can help

The Law Offices of Alan M. Cohen & Associates LLC are experienced with the credit application process and know that this tool can come with some liabilities. As such, we can help to better ensure you have a strong credit application that mitigates the risk of these liabilities and allows for collection on the debt in the event of default.

What types of provisions are important for a strong credit application?

Make sure to gather sufficient contact information. This should include the legal name of the company, business, or client who is seeking credit as well as address, and phone numbers. Additional provisions can include:

  • References. Request and check bank and credit references. Reach out and ask about the customer’s history making payments.
  • Costs. It is also wise to include terms outlining the expenses connected to collection, if necessary. These may include an interest of a set rate per month as well as additional collection costs and the inclusion of attorney’s fees.
  • Disclaimers. Disclaimers can include a provision stating the need to make claims in writing as well as a personal guarantee for the credit.

Are there any other tips to put together this type of legal document?

We provided additional tips in a previous post, available here. It is also important to point out that these documents are regulated and laws such as the Equal Credit Opportunity Act and Truth in Lending Act likely apply.

What else can my business do to make sure our credit application can meet our needs?

Putting together a valid credit application that meets your needs and follows all applicable rules and regulations is no easy task. The experienced commercial collections attorneys at Law Offices of Alan M. Cohen & Associates LLC know how to draft the application to your business’ needs. To schedule an appointment and discuss your credit and collection issues, call us at 508-763-6604 or send us an email today.