Are you having an unmanageable business debt and having a lawsuit by the plaintiff? Or do you want to defend your business debt but have less knowledge about it?Then you are in the right place! Just keep reading till the end, and you will know all basics to defend business debt. Also, you will know about the common defenses that you can quickly implement with legal help.

Smaller businesses or startups usually do not have a margin in the product price. Business debts are available for them to increase the business growth by adding extra fuel to it. These are not tied to any business asset; they are just like credit cards but can get expensive because of interest rates.  So, let’s know more about the business debt and lawsuits!

Business Debt Causes:

Small startups in their early stages rely on business debts to meet the necessary expenses of employees, service or product, and the offices. Sometimes mistake, negligence, or other external factors such as unpaid bills, market conditions, and delayed payments require financial support that ultimately cause a business debt. Otherwise, it’s challenging to survive for that business.

Good and Bad Business Debt:

Debts are mainly for lower to middle income. It is all about managing your reasons before taking a business debt. Good debt is for things that can build your income over time and increase your wealth, making it possible to pay back.

While bad debt is for the things that do very little to increase your financial income, and your business doesn’t get much profit. A high level of bad debts requires changes need to be made. Setting up the procedures around credit managers and effective policies makes it possible to decrease the risk of bad debt.

How Bad Business Debt Affects Business?

Adverse effects of bad debt affect plans of business growth in a very negative way. It reduces the available cash amount to run the day-to-day business. Bad debts always decrease your ability to pay your credits. In the business community and specifically among your customers and staff, it destroys the reputation of your business in general. It can get as worse as you might be introduced to threats of insolvency.

How To Avoid Bad Business Debt?

You can avoid bad debt by implementing ways to improve financial health. These effective policies include setting realistic credit limits by checking your credit and keeping checks online. You can defend a business debt lawsuit by understanding the terms and conditions of debt and understanding interest charges on late payments.

Make sure to check the mailing address where you can receive the invoice to avoid late payments. If you are struggling to pay all your credits, request to reduce your credit limit to prevent further bad debts.

Debt Defense

Now, we will discuss the debt defense, but first, you need to know what is defense itself. So, let’s check it out!

What is Defense?

If you got sued by the plaintiff for not paying a business debts collection lawsuit, the defense is that you are presenting why the plaintiff failed to prove the allegations and not owing to the money. Generally, if one of your defenses gets succeeds, you will win, making the plaintiff lost.

What is NOT a Defense?

Before applying for a particular defense, it is essential to know what NOT a defense is. Otherwise, you will lose the case. You providing reasons that you already have a lot of bills to pay is not a valid defense.

You mention the fact that the debt collector refused to arrange for reasonable payment will go against you. You stated that you want to make an agreement for payment and want to settle the case, which will not be in your favor.

Common Defenses To Present To Court:

Having an awareness of common defenses to alert the court about your case is important. Here is the list:

  • If the creditor provided an improper service manner and never received complaints and summons, raise this defense in the first appearance in court.
  • If you are the victim of identity theft, never agree to settle the case. Ask the plaintiff to prove your identity.
  • If the creditor has passed the time limit to file a lawsuit against you, the expired statute of limitation is your absolute defense.
  • Just raise the defense of payment if you believe not to have been credited for your paid amount.
  • You have the right to demand the plaintiff the original contract if you believe that the debt amount is incorrect.
  • Previously, if you declared bankruptcy and were discharged of debt during bankruptcy proceedings, raise this defense.
  • A plaintiff must have a license to collect the debt; if they don’t have one, the court needs to dismiss the case.
  • If the plaintiff is not the original creditor and is only a debt buyer, the debt buyer must write a license number in the complaint. Otherwise, the court should dismiss the complaint.

Ways To Defend Business Debt Lawsuit?

  • If you owe payment, but you can’t pay it now, don’t assume you can’t do anything about it. Responding with legal briefs to a debt lawsuit within time is important; otherwise, court judgment will be against you by default.
  • You can respond to the plaintiff by challenging their right to file the lawsuit. Plaintiff has to provide a chain of custody documentation and credit agreement you signed. Your absence of response might be considered as your admission of debt responsibility.
  • Plaintiff has to prove that you owe specific payment; also, that debt is your responsibility and their right to sue you.
  • The rules of statutes of limitation vary by state and even situation. You can seek legal advice for your case to get help with business debt.
  • A legal attorney can advise and help to understand all options to defend against a debt collection lawsuit. Many attorneys provide free consultations also. An attorney who believes that a creditor illegally sued you may take your case with no compensation from you.

How To Get Help With The Business Debt?

If you face the weight of business debt, know your options for your particular situation,  seek legal help from trusted and experienced assistance with personal and business debt settlement. Many attorneys offer to schedule a free consultation; go for it. 

Exclusively dealing with the attorney will help you efficiently instead of coping through the support staff. Let them provide their help with business debt to bring you lasting relief from debt.

Conclusion:

Summing up, having indulged in business debts can be problematic, but it’s not an end. With proper guidance and experienced advice, you can defend business debt lawsuit. Attorneys having years of experience providing their services defend business debt. You can take their consultation to have the debt-free life you are aiming for.