Today, more businesses failed, and litigation costs keep on rising. What could be the reason behind this?
Bankruptcies are no secret and a nightmare of all businesses; it increases the possibility of every business to close their doors forever. In addition to that, companies that operate too much of their money getting unpaid by clients are at risk of opening their doors to bankruptcy.
This is the result of allowing their clients to pay their bills slower, giving them extended payment plans, and later on, they’ll prioritize who to pay and not to pay.
Statistics has been shown that the average credit ratings of other companies and individuals are declining, and their obligation to pay is not a priority. In addition to the creditor’s misery is the reality that debtors are getting wiser these days. They are knowledgeable enough to pay and who not to pay.
This act can be seen through public media, internet, social media platforms, and professional piece of advice from attorneys, or word of mouth by peers who share the same experience.
Most of the time, debtor companies or individuals use litigation as their alibi not to pay what they owed. Because they are educated enough that if litigation is given against them, they have tons of strategies to use at their advantage.
Advantages of Debtors to Avoid Payments
Here are the common tactics of debtors to ditch payments:
Since most of these debtors are wise, they are educated enough that when a suit filed against them, they can utilize every strategy allowed by the law or court system. Debtors can make it up to 18 months or even more before forcing them to make a payment.
These strategies include:
- No show, which can result in a default judgment
- Motions for discovery
- Avoiding service
- Demanding witnesses
These strategies, most of the time, are utilized to test the creditor’s litigation policy and resolve to enable you to dig your errors that they can freely use at their advantage.
Mostly, debtors are aware that they are involved in a company that can file a suit against them. Not knowing what kind of suit it is, having the knowledge of this suit gives them a way of waiting for Debt Collectors agency phone calls, threats, and letters of possible litigation and silently waiting to see what will happen next if they did no action.
- Sympathetic Court
For sure, you’re aware that day by day; the court system has become pro-debtor. Cases for debts are being pushed farther away since the defendant is requesting an additional time that can result from pressing the matter.
- Counter Suit
This strategy is pervasive and effective because it has risen the plaintiff’s costs, time, and uncertainty in settlement by the plaintiff and obligating the plaintiff to contemplate their ROI (return of investment).
Because of this, creditors will ask themselves, what could be the cost to pursue debt and debtors defend it via countersuit? What could be the odds of a plaintiff winning? Or perhaps, what could be the consequences if the defendant will win? What creditor could gain in the end? Is the cost worth of their time or not?
In most cases, the answer is yes, but others are no.