Reasons that may impede an efficient debt collection

There might exist several reasons on the creditor's or the debtor's side that will make it more difficult to collect the debt

Omission on the creditor’s side

Failure to pursue the claim on time. Every type of claim has a strict timetable called statutory or limitation, until which a creditor can pursue collection.

Creditors often hesitate to collect immediately and personally make several efforts for an amicable collection - unfortunately often in vain and finally to their disadvantage. Therefore take care of the timely limitations you may encounter which would impede or prevent final collection.

Existing securities and privileged claims against the debtor

  • Debtor’s assets are secured. The debtor in still business but all his assets are secured an therefore blocked. The banks have a lien on equipment and have a right of offset against any funds in the customer’s account and all the receivables are assigned to an other secured creditor. The creditor will need to push debtor to the point of being able to come to the table with an arrangement. You do not want those with a security interest to pull the plug and put your delinquent customer out of business.
  • There are significant tax liens against the debtor which have priority over the creditor's claim. If all of debtor’s assets are encumbered due to tax liens, creditor will not be able to collect until or if the taxes are paid.
  • Creditor is one of many creditors who have judgments against the debtor which means that the creditor need to wait in line until an asset or deny becomes available to satisfy your claim.

Debtor’s termination of business activities

Debtor goes out of business which means that there aren’t any assets which can be seized to satisfy the claim or an existing judgment. If the debtor goes out of business and is without assets, the debtor often can’t collect any more.

Although the creditor has sued the debtor, won the case and successfully obtained a final judgment, there won’t be a fruitful collection. The creditor will unfortunately end up with an uncollectable judgment.


Contact us

Law office
Gerald E. Bitzer
Dahlienstr. 19
D-80935 Muenchen

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Phone: +49 89 313 4154
Fax: +49 89 3584 6926
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