The third mistake we see when it comes to filing and collecting a debt in Georgia with a lawsuit is the credit manager not updating and keeping current information on the customer. We see cases in which the creditor did business with “Joe’s Tires” for ten years, but in that ten years the original “Joe’s Tires, LLC” was dissolved and the customer reopened as “Joe’s Tires of Kennesaw, LLC”, often without skipping a beat and with no major difference seen by customers or suppliers to the tire shop. While we can still file suit on the debt as an open account, we may lose many of the preferential legal provisions in the credit agreement, thus potentially making a lawsuit take longer and cost more money. Additionally, often the original credit agreements contain serious penalties for late payment, interest on unpaid balances, and attorney’s fees in the event the creditor hires an attorney to collect the debt by filing a lawsuit. If I have to proceed simply as an open account, these add-on charges may be lost. It is important for a credit manager to update its customer’s credit applications on a regular basis.
Another common mistake we find is that the credit manager did not record and bill the debt in the proper legal name of the customer. We recommend, along with taking a credit application, that the credit manager pull up the corporate name supplied by the customer and verify the name of the company with the Secretary of State’s office. Additionally, it’s generally a good idea to see if the owners of the company have opened any new companies or similarly named companies. It’s particularly troubling to get a judgment against Joe’s Tires, LLC to find out that the business lease and assets are held by Joe’s Tires of Marietta, LLC, and that the customer applied for credit in the name of an entity with little to no assets. A simple check with the Secretary of State may prevent such a catastrophic error. A credit manager that takes steps to properly “know the customer” at the beginning of the relationship makes my job in collecting a debt much easier.