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Attorney Fees and Debt Collection

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One of the biggest concerns that companies face is the collection of outstanding accounts. A few of the options available to collect such accounts include having a law firm pursue an outstanding account or balance or turning the account over to a collection agency. This article will provide some insight into these options and how to place your company in a position to recover the account, as well as the associated costs of collecting said account.

According to Georgia statute 13-6-11, "...attorney fees are recoverable only when authorized by statute or by contract." The very best way for your company to make a good case for a complete recovery of any debt, plus attorney fees and court costs, is to have a well drafted contract, bill of lading, lease, or any other legal document. Within that contract, there should be a separate provision specifically allowing for the recovery of any attorney fees, costs of litigation, and court costs that may arise from any breach of the contractual agreement. Georgia law also allows for the recovery of attorney fees when the contract itself contains a clause allowing for such fees. {See Layfield v. Southeastern Const. Coordinators, Inc., 229 Ga.App. 71 (1997)}

Georgia statute 13-6-11 also allows for attorney fees, "...where the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense." In order to fall under this statute, the defendant must have acted in bad faith prior to initiating the suit against the defendant.

It is important to keep all documentation, invoices, and receipts so that no controversy will arise as to the amount of the debt outstanding. A demand for payment should be made on the debtor prior to initiating legal action, demanding that they pay the entire outstanding balance within ten days or legal action will ensue. If, at the end of the ten day demand period, the debtor fails to remit the entire sum in full, then legal action should commence.

Another important item is to ensure that your contract or bill of lading specifically provides for the terms of payment as well as a provision providing for the accrual of interest on any past due indebtedness.

By having a well drafted contract, bill of lading, or any other legal documents, your company has a good chance of recovering your entire outstanding balance due, as well as all attorney fees and costs associated with pursuing the debtor. Collection agencies are not attorneys and do not fall under Georgia statute and Georgia law allowing them to recover their efforts in pursuing the debt. The fees of a collection agency are generally not recoverable.

If your company is unsure if certain contracts or other legal documents conform under Georgia law, a simple review of those documents by an experienced attorney can save your company time, as well as the cost of potentially lengthy litigation. For more information on contractual matters, debt collections, environmental matters, commercial litigation, or other legal needs please consultant your legal advisor.

Steve Mills is the managing partner in the law firm of Mills & Hoopes, LLC, in Lawrenceville, Georgia. For more information on our legal services or your legal needs in areas such as contractual matters, litigation, commercial real estate, immigration, environmental matters, wills, divorce and family matters, personal injury, collections, small claims, landlord tenant or any criminal matters, please visit out website www.millshoopeslaw.com 

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