The speedy payment of debts is paramount to the success of a business. When those who owe your company fail to pay, swift action can prevent a debt from severely impacting your operations.
In Minnesota, businesses have multiple legal avenues to recover debts owed to them. These remedies allow you to enforce your rights and minimize financial losses. Let’s take a brief look at them.
Secured transactions
One of the primary remedies is through secured transactions. Creditors can secure their interests by obtaining a security interest in the debtor’s property.
This involves creating and perfecting a security interest under Article 9 of the Uniform Commercial Code (UCC). If the debtor defaults, the creditor can repossess and sell the collateral to satisfy the debt.
Judicial remedies
You can also pursue judicial remedies, including filing a lawsuit to obtain a judgment against the debtor. Once you have the judgment, you can choose a method of enforcement, such as garnishing the debtor’s wages or bank accounts.
Placing a lien on the debtor’s property is yet another possible remedy.
Bankruptcy proceedings
In cases where the debtor files for bankruptcy, you still have options. Depending on the type of bankruptcy filed, you may be able to recover a portion of the debt through the bankruptcy proceedings. Secured creditors often have a higher priority in these cases.
In other words, you may be able to reclaim collateral or receive payment from the bankruptcy estate.
Formal collections
When dealing with delinquent accounts, formal collection procedures can offer a solution. Typically, this involves hiring someone to recover the debt on your behalf through strategies like negotiation and litigation.
Having experienced legal guidance can help you explore these and other options to recover what is owed to your company.