In this video, Attorney Shea Krauskopf offers three tips for legal protection for creditors. If you’ve been working as a subcontractor, how can you ensure that you’ll be paid? Mr. Krauskopf provides information to help answer that question in this video. Call or text 800-929-1725 for an appointment.
Summary of the Legal Protection for Creditors Video
Attorney Philip Hundl — Hi, I’m Philip Hundl. I’m an attorney with Wadler, Perches, Hundl & Kerlick. I’m here with another lawyer at Wadler, Perches, Hundl & Kerlick, Shea Krauskopf. Shea is going to talk today about legal protection for creditors and give you some top tips for business owners regarding collection matters.
Attorney Shea Krauskopf — Okay, as Philip said, I’m an associate attorney with Wadler, Perches, Hundl & Kerlick. And I’m here to really address this video to small business owners who contract their services to others. You want to be paid for your services. I’ll talk about three things you can do to protect your rights as a creditor.
Tip One – Record an M&M Lien
Let’s say that you’ve done a project for another company and you haven’t been paid for that project. The best way to protect yourself is by recording what we call an M&M lien. This actually stands for a mechanic’s and materialman’s lien.
Basically, the most important thing you need to remember is to keep track of your timeline. The Texas M&M lien statute requires very strict notice provisions, depending upon whether you’re a general contractor, subcontractor, even a sub-subcontractor. These notice provisions generally require you to file a lien within two to three months after each month in which you performed labor.
The beauty of an M&M lien is that if it’s properly recorded, you can file a lawsuit to foreclose on that lien. This is an excellent way to protect rights as a creditor. Foreclosing on the project will allow you to satisfy your judgment.
Tip Two – Have the Business You’re Working for Sign a Credit Application
Another great way to protect your rights as a creditor is to use a credit application. Before performing any work, have the contractor that you’ve contracted with sign a credit application.
Generally, a well-written credit application will have a personal guarantee on it. This personal guarantee will also not only put the entity itself on the hook but then the person that signed the personal guarantee will be liable for the debt as well. So it’s a good way to bring another party into the lawsuit and put some pressure on more entities to pay you what you’re owed.
Tip Three – Contact a Business Attorney
Finally, another great way to protect your rights as a creditor is by just contacting an attorney. The attorney you contact will first do a lien evaluation.
If the lien is still available, your attorney can help you record the lien. If a lien is unfortunately not available, your attorney can start by sending a demand letter to the debtor.
This demand letter simply demands payment and additional attorney’s fees that you may have accrued. If an attorney does this and doesn’t hear from anybody, then the attorney can file a lawsuit seeking a judgment.
If a judgment is awarded, the attorney can then try to collect on that judgment by seizing the debtor’s assets. There’s a number of different ways to do that.
Please remember that when you contact an attorney, it’s important that you have all of your sent invoices or accounts receivable reports. It’s also helpful to provide some information about the debtor as well.
So these are the top three ways in which you can protect yourself as a creditor. Thank you for watching.
Let Us Help You Protect Your Rights as a Creditor
Wadler, Perches, Hundl and Kerlick combines many years of legal experience with small-town-Texas values. We have offices in Wharton and El Campo in Wharton County and in Richmond and Fulshear in Fort Bend County. Call or text us at 800-929-1725 for an appointment.