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Is Inflation Bad for Creditors?


How High Inflation Rates
Impact Commercial Debt Collection

With U.S. inflation higher than it’s been in more than 40 years, creditors are wondering what the effect will be.

If the nature of your business includes extending commercial credit, you may be concerned about how rampant inflation will affect your ability to collect payments.

The Down Side

Inflation troubles creditors for two primary reasons:

  1. During periods of high inflation, the value of currency declines over time. So the money creditors receive from their clients has less value than the money they lent. In other words, cash now is worth more than cash later.
  2. The higher cost of basic necessities will result in more consumers defaulting on their debts. The commercial businesses who rely on those consumers could then end up defaulting on their own financial obligations.

As the inflation rate climbs, any company that relies heavily on purchased goods can take a hit to their bottom line. In addition, rising fuel and energy prices can significantly increase both direct and indirect costs for all kinds of businesses.

Countries with
Highest Inflation

  1. Venezuela — 284.4%
  2. Sudan — 260.2%
  3. Lebanon — 208.1%
  4. Syria — 139.0%
  5. Zimbabwe — 96.4%
  6. Suriname — 61.5%
  7. Turkey — 61.1%
  8. Argentina — 55.1%
  9. Iran — 34.7%
  10. Ethiopia — 34.7%

Source: Trading Economics

Of course, companies severely affected by inflationary factors can choose to increase their own prices in order to compensate for increased costs. But there’s a limit to how much consumers are prepared to pay. So reduced sales and increased strain on business finances could be the end result.

The Up Side

However, high inflation can actually benefit creditors in some ways.

For example, more consumers will seek credit to buy big-ticket items because of the higher prices. So creditors can expect more new customers. Another plus: these higher-priced items will earn more interest for the creditor.

Also, during high inflationary periods, consumers may request more time to pay off their debts. Creditors who extend payment periods can collect additional interest.

Responding to High Inflation

Are you worried about your ability to collect commercial debt because of high inflation? Here are a few suggestions for reducing risk:

Not Always a
Bad Thing

A commonly held misconception is that inflation always harms everyone financially. But a small and predictable rate of inflation offers a hedge against deflation and therefore is generally considered acceptable (even good).

That’s because if the inflation rate runs too close to zero, there’s an increased risk of negative inflation. And negative inflation increases the threat of deflation – often resulting in economic recession or depression.


  • Maintain close contact with your commercial customers who are in danger of default. This will help them identify your business as a priority creditor.
  • Optimize your invoicing process to ensure you’re not lagging behind. Timely invoicing will help minimize cash flow issues. You may also consider shortening the payment window to 14 days, especially for electronic transactions.
  • Be willing to extend payment periods. Flexibility is key during times of economic uncertainty.
  • Surging inflation heightens the risk default, as companies under financial pressure may be tempted to aid their cash flow by delaying payment to suppliers. So now may be a good time to retain a commercial collection firm.

Partner with CAB

If inflation continues and the economic situation worsens, many businesses will be at greater risk of default. As a result, you may need to consider taking matters to the next level through legal action.

When you partner with CAB, our unique combination of law firm and commercial collection agency means you’ll have the right collection professionals in your corner to keep cash will flowing.

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Khan Academy
Christian Science Monitor

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More Americans Relying on Credit Cards Amid Rampant Inflation

Total Card Debt Expected to Hit All-Time Record

With inflation running higher than it has in more than 40 years, Americans are beginning to rely on plastic more than ever.

Continually rising costs of necessities is causing more Americans to depend on credit cards to make ends meet. Ted Rossman, a senior industry analyst at, believes that total card debt will likely hit an all-time record sometime this summer. What effect will this debt have on the economy as a whole and on businesses in particular?

Tables Are Turning

The current situation is a reversal of what occurred at the height of the pandemic, when Americans used stimulus checks to pay off a record $83 billion in credit card debt.

Living Paycheck
to Paycheck

Research conducted by PAYMENTS.COM in February 2022 revealed that 62% of the American adult population lives paycheck to paycheck. This figure includes half of all adults who earn more than $100,000 annually

The study also found that those who earn $100K maintain an average savings of about $11,000. However, paycheck-to-paycheck Americans who earn $50,000 or less have an average savings of only $788.


In addition to the stimulus money, pandemic-related forbearance and deferral programs for mortgages or student loans allowed households to apply these funds toward credit card debt.

But now, after paying these cards off, many Americans are diving back into debt due to soaring inflation.

The latest report from the Federal Reserve Bank of New York revealed that credit card balances are $71 billion higher than they were for the first quarter of 2021. In addition, the balances on new credit card accounts reached $229 million – higher than pre-pandemic levels.

In the short term, the higher credit card usage means increased revenues for businesses. But over the long term, the higher cost of goods brought on by interest charges can result in reduced revenues.

Delinquencies Increasing

A recent TransUnion study found that credit card delinquencies and defaults are increasing among non-prime borrowers (individuals with credit scores below 660). The credit card delinquency rate is projected to reach around 8.4% by the first quarter of next year.

Prime borrowers (those with credit scores above 660) were also found to be carrying a heavier month-to-month credit card debt burden than in the past two years, according to TransUnion.

As more Americans default on credit cards, fewer creditors will be willing to do business with them. This can result in a reduction of borrowing overall, curtailing revenue for businesses throughout the economy.

And yet, with the price of gasoline, groceries, and just about everything else eating into a finite amount of available cash, credit cards are often viewed as a lifeline. But at what cost?

Climbing Interest Rates

The average credit card balance was $5,525 in 2021, according to Experian, with an interest rate of about 16.4%. But as the Federal Reserve continues to hike interest rates in an effort to ease inflation, those balances keep rising.

With additional federal interest rate hikes expected this year, Rossman predicts the average credit card interest rate to exceed 18%. This means that non-prime borrowers, who may already be paying as much as 24% APR, can also expect rate increases.

–Article Continues Below–

What It Means for Your Business

Rampant inflation increases the risk of customers defaulting on debts. If your customers are other businesses, you also are at risk, as these businesses rely on consumers.

Companies that acquire a large proportion of their sales through credit cards can experience drops in revenue when their customers default on these debts. The more vulnerable a business is to consumer debt, the more likely it won’t be able meet its own financial obligations.

Which is why this period of high inflation is a good time to partner with CAB. Let our collection professionals carry this debt recovery burden for you, so you can focus on what you do best: operating a profitable business.

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New York Federal Reserve
The National Desk
Nerd Wallet
Harvard Business Review


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What You Should Know About UCC Filings

A Simple Way to Protect
Your Security Interest

Does your business provide credit to customers? Then you should know about UCC filings. Let’s start at the beginning.

What Is the UCC?

The Uniform Commercial Code (UCC) was established in 1952 as a means to consistently govern commercial transactions across the U.S.  It specifically addresses the following areas:


The Uniform Commercial Code does not cover certain business-related transactions, most notably:

  • Employment contracts
  • Real estate transactions
  • Service agreements

If you have questions about UCC applicability, the legal professionals at CAB can help.


  • Sales
  • Leases
  • Negotiable Instruments
  • Bank Deposits and Collections
  • Funds Transfers
  • Letters of Credit
  • Bulk Transfers and Sales
  • Documents of Title
  • Investment Securities
  • Secured Transactions

What Is a UCC Filing?

A UCC filing (sometimes called a UCC-1 or UCC-1 Financing Statement) pertains to secured transactions. The filing provides public notice of a security interest in a particular asset owned by a particular debtor. The UCC-1 protects a lender’s interests in case the asset owner files for bankruptcy or defaults on the debt. Should that occur, the lender may seize and/or sell the secured property.

A UCC-1 is filed with the Secretary of State’s office in the state of the debtor’s residence or the state in which the debtor-business is incorporated. (Forms are available online through the various SOS offices.) Because it is filed through the SOS, a UCC-1 is considered a legally binding instrument.

The UCC-1 is a fairly simple form, containing only three pieces of information:

  1. The Debtor’s name and address
  2. The Creditor’s name and address
  3. A description of the secured property

In order to remain active, a UCC-1 must be renewed every five years.

Conducting a UCC Search

Before extending credit to a customer in a secured transaction, you should first determine if any UCC liens have been placed on the secured property. You can conduct a UCC search through the SOS website in the relative state. When performing the search, it’s important to enter the debtor’s correct legal name, as well as any former names that may have been used.

–Article Continues Below–

If you find that the secured asset already has one or more UCC liens filed against it, you’ll need to decide if you extending credit to that customer is worth the risk. Lenders with the oldest UCC-1 filings have the highest priority claim to the secured property. This is why many high-profile lenders won’t file a UCC lien after that of another lender.

Why File a UCC-1?

Of course, the vast majority of people and businesses to whom you extend credit fully intend to repay you. But sometimes things happen which they cannot foresee. If your debtor or debtor-business is unable to repay the debt, you could lose all or part of the secured collateral, if you’re not protected.

Don’t Know Where a
Business Is Incorporated?

If you’re unsure where a debtor-business is incorporated, follow these steps:

  • Determine the address of the company’s office or headquarters.
  • Go to the Secretary of State’s website for that state and search the company name.
  • The result should indicate the state in which the business was incorporated.
  • Alternatively, you can conduct a national UCC search. Several online companies offer this service for a fee.


The UCC-1 provides that protection by establishing you as a secured party. In the event the debtor defaults, you have a “place in line” when the collateral is divided among all the parties.

Secured creditors are positioned at the front of that line (just behind the IRS and other government entities.) Which means your chances of recovering at least a portion of what you’re owed are much greater. On the other hand, if you haven’t filed a UCC-1, you’re considered to be an unsecured creditor — sending you to the back of the line in the event of a default.

How to File a UCC-1

As previously mentioned, the UCC-1 should be filed with the SOS office in the state where the individual debtor resides or where the debtor-business is incorporated. If the secured property is real estate, you should also file the UCC-1 with the recorder’s office in the county where the property is located.

All 50 SOS offices maintain websites that accept online filings, including UCC filings. These sites also provide the necessary forms for you to download and complete, as well as detailed instructions.

A national UCC-1 form is also available to download. However, some states require filers to use the state form, so be sure to look there first. When completing the form, follow all instructions carefully, paying particular attention to proper use of the debtor’s correct legal name and full address.

(The infographic above offers some helpful tips.)

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Wolters Kluwer
Fast Capital 360

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Commercial Bankruptcies More Common in First Quarter

Pandemic Has Changed the Timing of
Commercial Bankruptcy Filings

Did you know the first quarter of the year has become the most active time for commercial bankruptcy filings?

While in years past, the second quarter was the most active period for commercial bankruptcies, that’s changed since the COVID-19 pandemic. According to the American Bankruptcy Institute, more than 6,300 businesses filed for bankruptcy during the first quarter of 2021. And the number of first-quarter filings was even higher in 2020.

Commercial Bankruptcy Filings

Year Chapter
Chapter 13 Chapter 15 Chapter 12 Chapter 9 TOTAL
5,595 1,709 2,455 25 82 4 9,870
3,852 1,285 1,031 97 39 3 6,307

Source: American Bankruptcy Institute

Don’t Be Caught Unawares!

If one of your commercial debtors should file for bankruptcy, would you know how to protect your interests?

Types of Commercial Bankruptcy

  • Chapter 7 Liquidation for businesses
  • Chapter 9 Reorganization for municipalities
  • Chapter 11 Reorganization – for corporations, partnerships, or LLC’s
  • Chapter 12 Reorganization – for family farmers and fishermen
  • Chapter 13 Reorganization – for sole proprietorships
  • Chapter 15 Cross-Border Insolvency – for foreign companies with U.S. debts

At CAB, our lawyers and bankruptcy specialists are highly experienced in representing creditors’ interests in bankruptcy proceedings. We know the ins and outs of the U.S. Bankruptcy Code, and we will boldly pursue recovery of all monies to which you are legally entitled.

CAB offers a full range of bankruptcy recovery services range:  from filing proofs of claim, to negotiating critical vendor status with debtors, to serving on or chairing Creditors’ Committee meetings.

We even represent bankruptcy trustees in the liquidation of an estate’s receivables.

Taming the Bankruptcy Beast

All too often, creditors who receive a notice of bankruptcy just give up. They assume they have no rights or options with regard to their claim against the debtor.

But that’s not necessarily the case, particularly where commercial bankruptcy is concerned. If you receive a notice of bankruptcy filing from one of your business-debtors, don’t throw in the towel. You may have several options at your disposal.

But you’ll never know if you don’t call on CAB.

You don’t have to tame the Bankruptcy Beast on your own…Put the CAB team of recovery experts to work for you!

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American Bankruptcy Institute

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Effective Collaboration Skills for Credit Management

On Nov. 18, CAB Executive Vice President Melanie Morcelle shared her expert insights on “Effective Collaboration Skills for Credit Management.”
The webinar was part of Credit Soft Skillcon 2021, presented by Highako University.
Below are highlights of Ms. Morcelle’s presentation.

To watch a video recording of this webinar, Click Here.

The most effective work teams solve problems and make decisions as a group by building consensus. A consensus decision is one in which every opinion counts. It is not the same as a unanimous decision, and it is not a majority vote.

Building consensus in a team means reaching a decision that is acceptable enough for all team members to support, with no member opposing it.

8 Benefits of Consensus Decision-Making

  1. It encourages communication between team members.
  2. It helps build stronger teams by creating transparency among staff members.
  3. It also promotes employee engagement by empowering them to be part of a solution.
  4. Consensus decision-making enables better and more thorough decisions.
  5. Managers demonstrate that they trust their staff to propose ideas that have a widespread impact on the organization.
  6. Creativity is enhanced whenever employees with different backgrounds are included
  7. When you build consensus with your team, you also reveal your own blind spots.
  8. By making every decision by yourself, you’re missing out on important cultural or technical information.

4-Step Process to Implement
Consensus Decision-Making

  1. Assemble your team. Include a broad array of experience, tenure and cultural diversity.
  2. Identify a common goal. Make sure your team understands the purpose of the proposed collaboration.
  3. Gauge employee expectations. Encourage them to be honest, open-minded and flexible.
  4. Appoint a facilitator to advance the process.

Techniques for Building Consensus

Let’s look at three proven techniques for collaboration and consensus building: Brainstorming, multi-voting and nominal group technique.

Basic Brainstorming

  • The facilitator defines the problem or topic.
  • Each team member suggests ideas. (No idea is criticized or evaluated.)
  • The ideas are written on a board or flip chart.
  • Finally, the group goes back and refines the list.

Brainstorming Variations

Each person writes down three ideas that relate to the topic. Then they pass their ideas to the person on their right, who will then build off of the ideas. After another few minutes, everyone passes the piece of paper again, until it makes its way around the group. Once everyone’s ideas have been viewed by each team member, the group discusses them and decides which ones are best to pursue.

Rapid Ideation
Each team member writes down as many ideas as possible within a set amount of time.

Round-Robin Brainstorming
Every team member contributes one idea to the brainstorm. Each person must participate once before anyone can contribute a second idea. No one may say, “My idea was already mentioned.” Instead, the facilitator comes back to that person later.

Mind Mapping
In mind mapping, the team starts with one idea and then draws lines connecting related ideas to the first one.

Change of Scenery
The brainstorming session is moved to a different location (such as an outside casual lunch place) to help the flow of new ideas.


Multi-voting reduces a list of brainstorming ideas down to a manageable few.

  • Each team member is allowed a certain number votes for the ideas listed.
  • Members cast their votes for the ideas they believe are best, but are only allowed one vote per idea.
  • Ideas receiving votes from at least half of the team are circled.
  • Then the process repeats and continues until the list is reduced to three to five ideas.

Nominal Group Technique

Nominal group technique (NGT) is a more structured approach to collaboration.

  • The group discusses and clarifies the ideas generated by brainstorming and the facilitator assigns each idea with a letter.
  • Team members use small cards to rank the ideas, with “1” being the least favorite or least important.
  • The facilitator gathers the cards and tallies the rankings. The idea with the highest point total is the one of most importance to the whole team.
  • The facilitator then rewrites the list of ideas in the order of their importance according to the team tally.

Cross-Functional Teams

The ability to resolve issues that impact more than one department or team provides your organization with a competitive edge. But it also benefits the individuals involved. When team members from different areas of a company are brought together, collaboration and innovative solutions are the result.

When Assembling a Cross-Functional Team:

  • Aim for a diverse mix of experience, ability, seniority, gender, ethnicity and age.
  • Be sure to include some of your organization’s “influencers.”
  • Include subject-matter experts.
  • Include staff members who can help implement your goal.

Collaborative Benchmarking

When used collaboratively, benchmarking can create a spirit of friendly competition within an organization, while identifying best-in-class practices.

Internal benchmarking compares the processes and performance of various teams or individuals. Comparing performance metrics within a company can help you identify performance gaps, prioritize action items, and determine methods of improvement.

External benchmarking compares your company’s practices and performance with that of your competitors. It requires a standard means of data gathering (such as process mapping, workflow charts, etc.), as well as standard performance measures (KPIs or other metrics).

External collaborative benchmarking promotes discussion among front-line professionals. It requires the ability to recognize that others are better at something than they are, and a willingness to learn how they do it.

In Summary

  • Research shows that most workplace failures are due to a lack of collaboration or ineffective communication.
  • Consensus-driven decision-making, cross-functional teams and collaborative benchmarking for best practices are all effective tools for building stronger, more cohesive work teams.
  • Seamless collaboration isn’t only key to increasing productivity. It’s critical to employee happiness.
  • Today’s smart leaders recognize collaboration as a winning formula for success.
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How Does Commercial Skip Tracing Work?

Trying to locate someone who may not want to be found can be a frustrating experience. That’s why skip tracing is such a valuable tool for the commercial collections industry. But how exactly does it work?

Professional collectors use skip tracing to locate debtors whose contact information is no longer accurate. (The most obvious indicators of inaccurate contact information are returned mail, disconnected phone or wrong phone number.) This can happen, for instance, when the debtor has moved and failed to provide a forwarding address.

Playing Hide and Seek

The skip tracing process often involves searching through massive amounts of both public and private information. While much of this data is available online, access must be purchased. The alternative is to hire a professional commercial collection agency that offers this access as part of its services.

This research can be both time- and labor-intensive, and it requires more than just access; it requires specialized expertise in order to sift through the data and identify crucial items. Skip tracing methods used for commercial accounts are different from those used to locate consumers.

Commercial Skip Tracing

In commercial collections, skip tracers start with the credit application. From the credit app, collectors can often access an abundance of information, such as:

  • Secondary names
  • Cell phone numbers
  • Additional phone numbers and email addresses
  • Second business location
  • Names of vendors or banks used as references
  • Names of other individuals involved with the business.

In other words, the credit application is key to locating the party responsible for the debt.

In addition to reviewing the original credit application, commercial debt collectors often check the Secretary of State database to determine if a company is still in operation and if its corporate charter is current. From this site, they can also review the company’s articles of incorporation, as well as identify corporate officers and the company’s registered agent.

If there is a personal guaranty for the commercial credit, the skip tracer will pursue payment from the individual guarantor, and a demand letter can be sent to that person. (See sidebar, “About the Personal Guaranty.”)

Skip Tracing a Personal Guarantor

If a personal guarantor for the commercial debt has been identified, the skip tracing process then becomes very much like a consumer skip trace. As a result, state and federal consumer protection regulations now come into play.

For instance, the skip tracer may access the guarantor’s credit report, but only if the creditor was given permission to do so on the original credit application.

If unable to access the guarantor’s credit report, the skip tracer will begin to search online for Uniform Commercial Code (UCC) filings. The various databases and other resources that can be accessed in this search include:

  • Phone number databases
  • Social media (e.g., Facebook and LinkedIn)
  • Credit card applications
  • Loan applications
  • Utility bills
  • Public tax information and other public records
  • Driver’s license/vehicle registration records
  • Professional licenses
  • Landlord or property owner information

All available data is leveraged to motivate the personal guarantor to start paying the debt.

In accordance with government regulations, it is illegal for the skip tracer to identify himself as a debt collector to anyone but the personal guarantor of the debt. When attempting to obtain information about this individual’s location, any kind of deceptive, abusive or unfair practice is strictly prohibited by the Fair Debt Collection Practices Act (FDCPA).

(NOTE: The FDCPA and similar state regulations do not generally apply to the collection of commercial debts. However, once the personal guarantor of a business debt has been identified and has become the target of the collection effort, these laws do apply.)

The CAB Advantage

Is your company’s internal collections department proficient in skip tracing? If not, your staff can waste a lot of time attempting to track down debtors. Paying your employees to skip trace can really add up in terms of wages, health benefits, etc. Not to mention the cost of accessing locator databases.

At CAB we work on a contingency basis, so we only get paid if we recover for you. CAB has a dedicated Skip Tracing Department, as well as a department devoted exclusively to Asset Investigation. This is all included in our service to you.

We have access to several locator databases (which only properly trained professionals should utilize, to avoid violating privacy laws.) If the debtor-business is a sole proprietorship or a partnership, we’ll search for the owner(s) or partner(s) and assign the debt to those individuals. We can also locate corporate officers for Limited Liability Companies (LLCs), Limited Liability Partnerships (LLPs) or Chapter S Corporations, enabling us to identify the responsible parties.

The collection professionals at CAB are skip tracing experts. We can locate even the most elusive debtors to maximize your debt recovery. Put us to work for you!

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ACA International

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How Does Commercial Collection Litigation Work?

Not all of your debtor-businesses will pay up. Sometimes, the best option for recovery is to obtain a court-ordered judgment against them.

So when should you pursue litigation? And how does collection litigation work?

When to Consider Litigation

If there are no consequences for nonpayment, many debtors simply will not pay. In commercial collections, creditors often hear, “So go ahead and sue me. I’m still not paying.” Debtors who use this objection know that, by delaying payment, they’re essentially getting a free loan, since the litigation process can sometimes take a year before resolution.

Litigation is a logical step to consider if:

  • The debtor owes you more than a few thousand dollars,
  • You have documentation to prove the debt is owed to you,
  • The debtor has the financial means to pay you, and
  • The debtor has ignored your payment demands for at least 90 days.

Before filing a lawsuit, a reputable commercial collection agency will perform a pre-legal investigation of assets. This process helps to determine which accounts are good candidates for litigation. 

Costs of Litigation

In deciding whether or not to pursue litigation, creditors should also consider the financial cost of filing a lawsuit. Typical litigation costs include attorney fees, filing fees, and miscellaneous costs for depositions, sheriff fees and process server fees.

Commercial collection agencies that also offer full-service legal assistance can estimate these costs upfront and help manage them for you.

Litigation Time Frame

It takes at least four months to receive and record a judgment against a debtor. If there are no complications, the standard time frame is as follows:

  • Two to four weeks for attorney to prepare and file lawsuit paperwork;
  • Two to four weeks to locate and serve debtor (see sidebar, “Who Will Be Served?);
  • Thirty to 45 days for debtor to respond;
  • If no response, two to four weeks for attorney to file for default judgment;
  • Two weeks to three months for court to issue judgment;
  • Once judgment is rendered, one week to two months for attorney to record the abstract and file necessary liens.

If there are no complications and delays, the above process can take about nine months. Occasionally (less than 5% of the time), a debtor may diligently fight the lawsuit. In that case, the process can take as long as18 months before a judgment is rendered.

Legal Venue

Lawsuits may be filed in state civil court (i.e., municipal court, superior court, justice court, county court, etc.) or in small claims court within the proper judicial district (or venue).

Most states (including California) allow creditors to sue in small claims court as long as the suit is not demanding more than the small claims limit (which in California is $5,000 for commercial collections). This limit varies by state. The advantage of small claims court is that the procedures are less formal and the process more streamlined than those of other courts.

The proper judicial district is normally that in which:

  • The debtor-business operates,
  • A business contract was signed,
  • A business contract was to be executed, or
  • Other events leading up to the lawsuit took place.

What to Expect

After the lawsuit has been filed, what should you expect?

Some commercial collection cases will settle favorably once litigation has begun, but before the process runs its course.

Other times, the creditor must “go a few rounds” with the debtor-business. In those instances, the case may have to be taken all the way to trial. These instances are rare, however, and trial is only necessary when factual issues are disputed. When the facts are undisputed, many collection matters are resolved by a summary judgment in the creditor’s favor.

After Judgment

Once a judgment has been rendered and docketed, the process of enforcing that judgment and recovering your money begins. There are several resources available to accomplish such recovery.

Subpoena. Debtors can be subpoenaed, requiring them to disclose their financial resources.

Seizure. In addition, assets may be seized.

Wage Garnishment. If there is a personal guarantee for the debt, the guarantor’s wages may be garnished.

Sometimes debtors will attempt to hide or transfer assets to prevent legitimate creditors from seizing them. This is where a commercial collection attorney can work to uncover hidden assets or wrongful transfers, making them once again available to satisfy the judgment.

All during this enforcement process, the amount owed to the creditor is accumulating post-judgment interest (at a rate that varies according to state).

An Important Step

Litigation is an important component in the commercial collection process. Without it, debtor-businesses can simply refuse to pay, knowing you will not follow through. Most business owners want to do the right thing but, unfortunately, that is not always the case.

When stronger steps are required to collect what’s rightfully owed to you, a collection attorney can be your staunchest ally.

At CAB, our legal expertise and proprietary methods work together to ensure the best possible outcomes for our clients who choose to pursue litigation. We would be honored to serve you.

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How Does Commercial Debt Collection Differ From Consumer Collections?

You’re a business owner who’s decided it’s time to hire an agency to collect on your past-due accounts. But finding one that’s right for you can be confusing and stressful.

First of all, should you retain a consumer collection agency or a commercial collector? It’s important to know the differences between the two, as they are significant.

Consumer Collections Explained

Whenever an individual owes money to a business, the business may hire a consumer collection agency to locate the individual consumer and encourage him or her to pay the debt. Typically, the amount of the consumer debt is considerably smaller than that which is owed in a business-to-business (i.e., commercial) transaction.

Consumer collection efforts are regulated by the Fair Debt Collections Practices Act (FDCPA). This federal law was enacted by Congress in 1977 to protect consumers from abusive third-party debt collection practices. The FDCPA establishes collection guidelines, defines consumer rights, and stipulates penalties for violations.

In addition, most states have their own debt collection laws. Some of these mirror the FDCPA. But some offer even more protection to consumers. For instance, California’s Rosenthal Fair Debt Collection Practices Act expands the definition of “debt collector” to include the original creditor.

Commercial Collections Explained

Commercial collections, on the other hand, involve the recovery of unpaid business debt owed to another business. This commercial debt is usually incurred when the debtor-business fails to pay the creditor as per the terms and conditions of a legally binding contract.

With much larger amounts involved, failure to pay commercial invoices can significantly impair a company’s cash flow, preventing them from paying their own vendors, even forcing them to halt production. Also, more entities are typically involved in the commercial debt recovery process (e.g., Accounts Payable personnel credit managers.

Commercial collection agencies are not regulated by the FDCPA. Even in situations involving a personal guarantor of a business debt, the debt is still not considered to be a “consumer” debt, and so it is not covered by the FDCPA.

Nor are commercial agencies regulated, per se, by any state debt collection laws. However, more than 20 states and several large municipalities currently require resident commercial collection agencies to be licensed. And in some jurisdictions, they must be licensed in the states in which they collect.

How Are Commercial Collections Regulated?

Even though commercial collection agencies are not governed by the FDCPA, that does not mean their activities are not subject to regulation. The principal body governing the activities of commercial debt collectors is the Commercial Collection Agencies of America (CCAA). While this association is not a government entity, it is nevertheless responsible for supervising the activities of commercial debt collectors.

In order to become a certified member of the CCAA, agencies must abide by high standards of practice and uphold strong ethics. Not only are aggressive and unethical tactics prohibited, but prospective CCAA members must meet rigorous certification criteria.

Do Your Research

It’s up to creditors themselves to research prospective agencies to ensure that both they and their debtors receive the highest standards of service when collecting on commercial accounts.

For instance, some collection agencies collect on both consumer and commercial accounts. But with such significant differences between the two, your company is much better served by selecting an agency that specializes in the type of debt you need to collect. Specialized agencies are usually more successful in recovering funds than those who handle both types of debt collection.

Also, because licensing is complicated and expensive, some collection agencies opt to forgo it. The negative ramifications of using an unlicensed agency can be serious. For one thing, a debtor-business owner who learns that your agency is unlicensed would likely avoid paying. (Wouldn’t you?)

CAB collects only on commercial accounts, and we’re licensed and bonded in all U.S. states and municipalities that require it.


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My Debtor Filed for Bankruptcy – What Should I Do?

You’ve just received a notice from the U.S. Bankruptcy Court that one of your debtors has filed for bankruptcy. How should you respond?

The answer depends on the type of bankruptcy that was filed.

Bankruptcy Chapters

Most people are surprised to learn that there are in fact six different bankruptcy types under the U.S. Bankruptcy Code:

  • Chapter 7 Liquidation — for both individuals and businesses
  • Chapter 9 Reorganization — for municipalities
  • Chapter 11 Reorganization — for corporations, partnerships or LLC’s
  • Chapter 12 Reorganization — for family farmers and fishermen
  • Chapter 13 Reorganization — for individuals and sole proprietorships
  • Chapter 15 Cross-Border Insolvency — for foreign companies with U.S. debts

For all of these bankruptcy types, once the petition has been filed, creditors are prohibited from attempting to collect the debt.

By far, the three most common bankruptcy types are Chapter 7, Chapter 11 and Chapter 13. So we’ll focus on these three.

Chapter 7 Liquidation

In a Chapter 7 bankruptcy, the debtor’s financial obligations are essentially wiped clean (with a few exceptions). Chapter 7 is available to both individuals and businesses.

The Notice of Bankruptcy sent to each creditor by the U.S. Bankruptcy Court includes information about a “Meeting of Creditors” (also known as a “341 Meeting,” based on section 341 of the bankruptcy code). The purpose of this meeting in a Chapter 7 is for the bankruptcy trustee to determine if the debtor owns assets which can be liquidated and distributed to creditors.

After the 341 Meeting, all creditors listed in the bankruptcy petition receive a notice from the court, indicating whether the Chapter 7 has been deemed an “asset” or “no asset” case. If the case is determined to be “no asset,” unsecured creditors will not receive any payments.

However, if the case is determined to an “asset” bankruptcy, and you are an unsecured creditor, you must submit a Proof of Claim in order to be included in the distribution of the debtor’s liquidated assets.

Chapter 11 Reorganization

Businesses that want to remain operational but need time to restructure their finances in order to pay their bills can file Chapter 11. Because of its complexity, this type of reorganization is typically used only by corporate entities.

The purpose of the 341 Meeting in a Chapter 11 is different than that of the Chapter 7. During the Chapter 11 meeting, the U.S. Trustee will:

  • Gather information about the debtor’s business plan,
  • Determine the plan’s feasibility,
  • Explain the debtor’s obligations, and
  • If necessary, inspect the debtor’s books.

Every Chapter 11 debtor-business has a 120-day period during which it has an exclusive right to file a reorganization plan with the court. After that, creditors can file competing plans.  

The Creditors’ Committee

Creditors’ committees often play a significant role in Chapter 11 cases. Their primary purpose is to ensure that unsecured creditors — who are often owed smaller sums — are adequately represented in the bankruptcy proceedings. In other words, creditors’ committee members represent the interests of the entire class of unsecured creditors.

The creditors’ committee must approve the debtor’s Chapter 11 reorganization plan before it can be approved by the bankruptcy court. There is no time limit on completing repayment of debt through the plan; however, six months to two years is the standard.

Chapter 11 Proof of Claim?

Creditors in a Chapter 11 do not need to file a Proof of Claim if the amount due listed in the bankruptcy petition is accurate. However, if the claim is listed as disputed, contingent or unliquidated — or if you believe you’re owed more money than the petition indicates — you should file a Proof of Claim for the full amount you believe you are owed. 

Chapter 13 Reorganization

Chapter 13 bankruptcy is another type of reorganization. It applies to both individuals and sole proprietors of businesses and involves a three-to-five-year repayment plan.

As with Chapter 7 and Chapter 11, all creditors listed in a Chapter 13 petition will receive a notice of the bankruptcy case filing, which includes a 341 meeting of creditors date, as well as deadlines for filing claims. With Chapter 13, the purpose of the 341 Meeting is to determine if the debtor’s proposed repayment plan is feasible in the eyes of the trustee.

Part of the Chapter 13 plan includes the proposed amount to be paid to unsecured creditors. This amount will vary, depending on the debtor’s disposable income. However, it cannot be less than what the creditor would have received if the debtor had filed a Chapter 7 bankruptcy that was determined to be an asset case.

What About Secured Debts in Chapter 13?

If you are listed as a creditor in a Chapter 13 bankruptcy and the debt is secured, the debtor has three available treatment options:

  1. He may surrender the property back to you.
  2. If he is not behind on his payments, the debtor may retain the secured property and continue to make regular payments to you “outside” of the Chapter 13 plan, just as he did before filing bankruptcy.
  3. If he is behind on his payments, the debtor may retain the property and pay for it through the monthly Chapter 13 plan payment.

Once the bankruptcy court has approved the Chapter 13 repayment plan, claims will be paid out based on priority. For example, secured debts are paid first, then priority debts (such as taxes and domestic support obligations), and then general unsecured debts. 

CAB has been a leader in bankruptcy recovery since 1954. We leverage our partnerships with major bankruptcy and financial advisory firms to ensure our clients will receive maximum debt recovery.


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U.S. Courts


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Collection Representative

Collection Representative

Collection Representative Image

Creditors Adjustment Bureau, a trusted name in collections since 1954, is currently seeking Collection Representatives to join our team. CAB specializes in commercial collections, serving as both collection agency and law firm. Our Representatives work on behalf of some of the fastest-growing companies in technology/software, social media, construction/building supply, commercial properties, transportation/logistics, and food services, as well as major law and accounting firms.

Primary responsibilities for this position include partnering with our clients to manage their receivables by initiating conversations with their customers via telephone, mail, or email in order to collect payments and settle accounts. If you’re good with people and have excellent communications skills, let’s talk!

This is a full-time position; salary is commensurate with experience.


  • Contacting debtors to collect payments on past-due accounts and resolve discrepancies.
  • Locating debtors via credit bureau information, background checks, loan documents, and other paperwork or databases.
  • Reviewing terms of sale or loan documents with debtors.
  • Verifying all debtor information, including phone numbers and addresses.
  • Providing excellent customer service by listening to debtors’ explanations and establishing new repayment terms, if appropriate.
  • Recording new repayment terms, when appropriate.
  • Initiating repossession proceedings or transferring accounts to collection attorneys, when necessary.
  • Monitoring and maintaining account databases.
  • Processing monthly credit memos and associated reporting.
  • Complying with all federal and state debt collection regulations.


  • High school diploma or GED; associate’s or bachelor’s degree preferred.
  • At least one year of customer service experience in a professional environment
  • Business-to-business experience
  • Strong computer skills, including Microsoft Office
  • Excellent time-management skills
  • Strong verbal and written communication skills
  • Strong work ethic
  • Proven ability to function independently


  • Competitive salary
  • Health insurance
  • Dental insurance
  • Matched 401K program
  • Paid time off
  • Friendly and energetic work environment
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