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Why do credit applications matter when it comes time for bad debt collection in Massachusetts?

Every business needs to provide some form of a credit to customers throughout the business lifecycle. Credit should be provided to customers after careful scrutiny of their credit scores, and their past transaction history, reducing the risk of potential bad debts. Although credit comes at a cost, it can also provide a way to seek long term relationship with the customer, who may pay later, but continue to use services that are vital for survival and growth. However, there may be times that such credit payments are never returned from the debtor, and result in bad debts. For businesses, bad debts are an unavoidable cost, but they can be mitigated using various legal ways to seek the payment of bad debts. One such way is to use credit applications.

Understanding Credit Applications

Credit applications are the first document that forms as a contract between a lender and a borrower or supplier of goods and services and their customer or client. A lender or supplier should seek details about a borrower before providing them with credit. For businesses, credit terms may include the use of services and products, the period for which the credit is extended,  credit terms, payment schedule, and the type of dispute resolution be it litigation, arbitration or binding mediation or all of some of these routes, if the customer defaults, or refuses to repay their debts. These contracts dictate the terms of service. They may seek bank details, specify the interest rate to be charged on unpaid debts, official business address and company information, legal jurisdiction, and attorney payment clauses just in case a legal matter arises. Because credit applications set the table for getting paid, consulting the experienced collections attorneys at the Law Offices of Alan M. Cohen LLC at the outset may save you headache and money when your good customer goes bad, as some inevitably will.

Using Credit Applications to Recover Debts

Credit applications can be extremely useful in debt recovery. These applications can provide vital information to assist aggressive debt collection and bad debt recovery in the future. Many credit applications have a legal clause to invoke the forum and venue of litigation or dispute resolution. Forum selection clauses can allow the creditor to avoid travelling to distant states in order to obtain a judgment. Credit application can also include details of bank accounts and contain personal guarantees giving you another pocket from which to collect. They can be used to create security interests in your materials and the proceeds thereof so that you can be a secured creditor and not an unsecured creditor.

Because credit applications are a critical component of debt collection in Massachusetts, Attorney Alan M. Cohen puts special emphasis on preparing them before a credit transaction takes place. This is an effective legal practice that our collections attorneys use as the first line of both defense and offense when bad debts occur. The practice is rooted in the philosophy by which Law Offices of Alan M. Cohen LLC has been operating with since the past over 35 years – – Get you paid!! The Law Offices of Attorney Alan M. Cohen LLC has represented countless businesses in lawful and aggressive debt collection in Massachusetts for decades. For more information about exactly how we can help in your attempts to recover bad debts, call (508) 620-6900 or send us an email to info@collections-law.com.

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