Default Judgments on the Rise in Construction Sector

Top Quote RBA has forwarded a record number of construction related collection claims to litigation and has seen a sharp increase in default judgments obtained. While this is desirable for its clients, RBA would like to minimize the shock, frustration and hardship that may result from its aggressive, court sanctioned involuntary enforcement proceedings and solve matters prior to these proceedings. End Quote
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  • Los Angeles-Long Beach, CA (1888PressRelease) May 24, 2011 - In many states across the country Rumson, Bolling & Associates has pursued the collection of construction-related commercial collection claims. Many contractors and suppliers absconded from their places of business, disconnected their phones, and adopted new names or phone numbers in an attempt to shake the unpaid obligations that resulted from construction financing that dried up. Simply put, funding came to a screeching halt for many contractors which resulted in many subcontractors and materials suppliers not getting paid.

    Rumson Bolling Associates, took the situation seriously and took on many of these unpaid obligations in an attempt to assist its construction related clients in the recovery of this vast pool of unpaid monies. Due to the fact that a lot of entity-switching and obfuscation took place with the debtor companies in order to evade payment, RBA upgraded its skip-tracing, asset location and fraudulent asset conveyance analysis procedures.

    Most significantly is the fact that RBA forwarded a record number of commercial construction related collections claims to litigation. The result of these has efforts has been a sharp rise in the number of default judgments entered against debtor companies and debtor sole-proprietors. RBA's skip tracing and service of process stake-out efforts resulted in the successful service of summons and complaints on the proper registered agents and responsible individuals. Unfortunately, many of these complaints have gone ignored and unanswered which has left the debtors open and vulnerable to default judgments and aggressive post-judgment involuntary asset seizures to satisfy those judgments.

    Rumson, Bolling & Associates is sensitive to that fact that perhaps a debtor did not realize how swiftly the court systems can accommodate creditor's legal maneuvers to levy bank accounts, or seize property and equipment. RBA has successfully levied bank accounts, seized property and equipment and instituted keeper levies as part of its post judgment remedy program. The recipients of such actions are often unhappy, confused and disgruntled, RBA is sensitive and compassionate to the fact that sometimes a debtor may feel that he has been treated less than fairly even though the courts have sanctioned these legal remedies.

    What can a debtor company do to prevent being surprised by aggressive enforcement of default judgments?

    1) When you first receive a letter from a collection agency immediately respond to it and attempt an early resolution. Many agencies will accept lump-sum settlements for a lesser amount than the principal balance. Payment plans are an easy way to resolve a matter, keeping it from escalating.

    2) If you get served, RESPOND to the complaint, ignoring it will make matters worse.

    3) Often you can reach out to the creditor's representative after having been served and still settle the matter without having to hire counsel.

    4) Creditors and their representatives want you to communicate; going silent will not help the situation.

    5) If you have not properly dissolved your corporation, and are being sued, you could be opening yourself to personal liability and should consult an attorney to protect your assets.

    6) When times are tough, often explaining your company's situation to a trained customer service solution representative such those that staff helpdesk ( @ ) rumsonbolling dot com can result in a plan that will allow your company to emerge from its difficulties and then begin making payments dot

    7) If you are facing entry of default judgment, it may be wise to contact the attorney and "stipulate" to a judgment on a voluntary basis. Often this will be accepted and it is likely to be based on what you or your company can actually afford rather than being subjected to an enforcement action that wipes out your company's account or one in which your property or equipment is seized.

    8) If you shut down your company and begin in the same line of work under a new name, expect that unpaid creditors will be looking at your new company as a successor in interest. Make sure that you follow your attorney's advice to eliminate any successor in interest claims. If you do so proactively it can be relatively simple to protect your company from successor in interest claims.

    9) Don't evade the process server. If you are being served, accept service and stay calm. Lawsuits are often very frightening and take time to resolve, but avoiding them tends to incite creditors and make them less likely to negotiate with you.

    10) Don't panic. If your accounts have been levied, contact the attorney or creditor and tell them that you weren't prepared for the loss of the funds you needed to operate and that you need those funds to continue doing business. RBA has been willing to re-liberate levied funds so that a judgment debtor could remain liquid and continue operating. If you stipulate to a payment plan, a creditor may give you back a portion of the levied funds so that you can operate.

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