Debt Collection & Litigation

International traders often encounter payment problems when they sell goods in the U.S. on credit.   Frequently, problems may arise when a buyer faces insolvency, changes identity, claims defective goods, or if the buyer simply ignores your demand for payment.  In all of these cases, the vendor may feel defrauded.

The FIRST thing a vendor MUST do after the buyer becomes delinquent is to impose an absolute deadline.  Of course, every vendor tries to strike a balance between payment flexibility and customer satisfaction, hoping to maintain the supply line for as long as possible.  But, not every buyer is worth waiting for, and the vendor must be careful in not missing the “Statute of Limitation.” Typically, after a trade debt is 90 days past due, and if the buyer still refuses, or is unable, to begin payment, or if the buyer suddenly complains about the quality of your goods without evidence or good-faith belief, then you should consider filing a lawsuit right away to recover your money, because chances are your buyer has no intention of paying you in the near future. 

A “Statute of Limitation” is a state law that specifies the time period within which a creditor must file suit against a debtor to recover a debt on contract.  After this time period has expired, a creditor will have waived his/her/its right to sue the debtor.  In California, this time limit is four years for a written contract, and two years for an oral (verbal) contract.  However, in certain circumstances, this time limit may be “tolled.”  To toll a statute of limitation means to legally “suspend” the running of time.  The circumstances under which a statute of limitation may be tolled, or suspended, depends on the facts of your case, so please feel free to contact us about your rights to sue.

Every state has its own statute of limitation for a contract.  Please refer to the following statute of limitation site for the state of your interest.

The second most important thing that a vendor/ creditor must do upon learning that a debt may become uncollectible, is to gather as much documentary evidence as possible relating to the bad debt.  For example, agreement in writing, purchase orders, invoices, shipping documents, letter, fax, email correspondence, phone bills reflecting the date and time of phone calls, and any other document that can be used to support your case.  Documentary evidence is crucial to winning a case, because documents prove the existence of a FACT, and cases are won in court based on FACTS.

Sometimes, a vendor should refrain from filing a lawsuit if he/she/it believes there is not enough documentary evidence.  Usually, documentary evidence is sufficient in a collection case when you have a purchase order, shipping documents and invoices.  However, a pure collection case (as opposed to litigation) may be complicated by the debtor's claims of defect.  In such an event, the vendor/ creditor should be more cautious and patient with the delinquent buyer/ debtor, and at the same time collect as much documentary evidence as possible against the buyer/ debtor.

The most powerful documentary evidence is an “admission” by the debtor.  Any statement from the debtor is an “admission.”  Therefore, if a debtor will affirm a trade debt by way of a letter, fax, or email, the creditor should immediately take advantage of such an opportunity.  A written affirmation of debt not only disposes of unnecessary issues, which are often injected by the debtor's attorney, it is also a good way to determine if your debtor is dealing with you in good-faith.

Therefore, if and when your buyer claims poor quality, ALWAYS inspect the goods to verify the truthfulness of the claim, and then insist on a Written Affirmation of the balance owed from your debtor.


Many people are unclear about the role of a collection agency versus the role of an attorney.  To clarify this distinction, one must realize that collection agencies are not attorneys, and as such they are limited in what they can do.  They may barrage debtors with irritating phone calls and letters, hoping to annoy the debtor to the point of paying.  The problem with this approach is that unsavory businessmen are as persistent as the debt collection agency, and it may be months, if not years, before one party surrenders to the other, and no one knows who will surrender first.  Regardless of the outcome, a collection agency cannot file a lawsuit without HIRING an attorney.

Now a days, collection agencies hire in-house attorneys, or attorneys on a contract basis, to handle collection matters, which necessitates the further distinction between a “collection” attorney and a “litigation” attorney.  Most collection attorneys engage in high-volume, low-return cases, and therefore they will not sue the debtor for anything beyond the debt owed.  However, in most commercial transactions involving millions of dollars of trade it may be quite complex to decipher the law and organize the facts, which may involve numerous witnesses, voluminous foreign documents, and international laws.  The facts of such a complex case must be carefully analyzed, and the laws must be extensively researched, which varies from issue to issue.  A collection attorney normally will work for you on a Contingency basis ONLY if your case does NOT involve convoluted issues of laws and facts. 

Therefore, you should be very cautious when a collection agency promises you a contingency fee that includes a lawsuit.  If your case requires extensive analysis and research, you should hire a dedicated attorney with the patience and experience to represent you in court. 

Our firm has been litigating commercial matters since our inception.  We do not waste time on demand letters or phone calls.  If we believe an amicable settlement can be reached with the debtor before filing a lawsuit, we will make ONE attempt at settlement, so that our client may avoid costly litigation.  However, when our attempt at settlement fails, we TURN ON THE THROTTLE.


Unlike other attorneys, we do not shoot first and ask questions later.  Our aim is to increase cash flow for our clients and therefore we do not waste time or money.  Our methodology requires that we first find the assets of the debtor and identify the right parties to sue, so as to increase the chance of recovery for our clients.

Unscrupulous businessmen often hide assets by fraudulently transferring their assets to friends and relatives, or to another corporation owned and operated by the debtor, or the debtor may simply change its corporate identity and claim separate entity.

We do not engage in high-volume, low-stake cases, which means we do not file suit unless we know who is hiding the money and where the money is hidden.  We therefore file each lawsuit with a plan of action, like a roadmap, so that we do not aimlessly, haphazardly, and needlessly drag our clients into costly litigation and then hope for the best.

We are well versed in the debtor’s game of fraudulent transfers, which under California law entitles the creditor the right to rescind the transfer.  See the California Uniform Fraudulent Transfer Act.

We work with experienced attorneys all over the U.S., who are competent at trial and who will go after your debtor in all circumstances.  We also work with reliable asset search companies who can uncover hidden assets anywhere in the U.S.  Therefore, it is a matter of time before we reach the assets of your debtors.

Time is of the essence!  Please do not hesitate to contact us about your case.

Disclaimer:  Information provided on this page is only intended as a general guideline for the reader, and it is not intended as legal advice for any particular case, or exhaustive of all legal requirements.