Should I file? Considerations prior to filing a lawsuit and debt collection investigation.
When someone is owed money and they are unable to collect it, the first option that comes to mind is to file a lawsuit against the person who owes you money. However, one should always analyze whether filing suit is the right option given the situation at hand. The first step of what I will refer to as the “pre-litigation stage” and that is the investigation period. As an attorney, when I meet with a client who is owed money, the first thing I try and ascertain is what is the reason behind the nonpayment. The answer to this question often assists me in fairly and accurately reporting to the client/creditor the ability to make an economic decision as to whether they should spend additional time and money to attempt to collect on the debt.
Where to start when deciding whether you should pursue a debt collection lawsuit or other means, you have to investigate whether collection is viable.
Practically speaking, the first step to the investigation process is to ascertain whether the debtor has any available assets or employment to satisfy some, if not all, of the debt. In the event the debtor is a business, the creditor should confirm whether the debtor is still in business. If the debtor is an individual, this investigation may include reaching out to the debtor to determine their intentions regarding repayment and confirm the debtor’s location (address and phone number). In short, the investigation process should start with gaining insight into the debtor’s present financial position, which can sometimes be impractical or unfeasible. If the latter applies to your situation, you could have a credit report ran on the debtor. In fact, you can even run a credit report on a business or an individual. In the event the creditor report has positive results, it will likely indicate that the debtor is collectible.
The next step is to determine the legal character of the debtor. This is a necessary step prior to initiating litigation as the proper party will need to be named and served with the summons and complaint if the litigation route is pursued. A pro tip is to review any checks written to you by the debtor, if there is any. The reason being is that not only will a current check normally reflect the debtor’s legal name and address, but also provide you with information as to whether they bank, which can be helpful if you have to collect on the debt following entry of a judgment. If the debtor is a business, the Illinois Secretary of State is a great resource. The Secretary of State maintains online records for corporations and LLC’s, including both foreign and domestic business entities. The online records will also reveal whether the business is in good standing with the State of Illinois.
A side note, if the debtor is a general partnership, they do not have to register with the Secretary of State. In addition, there are business entities in which an individual is doing business under an assumed named, so your initial search may not pull up their business records depending on how well known their assumed name is. Assumed names must be filed in the county clerk in the county where the individual does business, so that is a good starting point if you are having trouble locating the assumed name of a debtor. In addition, there are a few other online systems that provide information that is helpful in the prelitigation stage. The Better Business Bureau and the Illinois Manufacturers’ Association Direct can provide valuable information regarding a debtor’s business and home location.
Another option is to use the Illinois Secretary of State to search records on motor vehicles and professional licenses. If these various searches reveal nothing about the debtor, it may make sense to hire a process server to run a skip trace. Using a skip trace, the process server will attempt to locate the hard to find debtor and possibly a list of their assets, depending on the type of skip trace.
As an experienced creditor’s attorney, I am cognizant of the need to conduct an initial investigation to ensure that my client is fully informed in making an economic decision whether the time and money associated with litigation should be invested. Make sure to contact IllinoisAttorney.com to collect on an unpaid debt or to have us assist you in sending a demand or other various options when someone owes you money and you want to get paid! Contact Us Here!