At the Smiley Law Group, we see this situation often: your debtor has failed to pay what is owed and continues to ignore your attempts to contact them to work things out. You’ve called the debtor, sent them emails and demand letters, but no response. Then comes the crucial decision of whether to file a lawsuit to collect the debt owed.
Often there is no way to recover payment for evasive debtors other than litigation. This can be an expensive and unpredictable course, but sometimes it is necessary. Here’s what you can expect if you file a commercial collections lawsuit against a debtor in Louisiana.
Statute of Limitations (Prescription)
You have a certain amount of time, from the date of the last payment or when the contract for payment was breached, to collect your debt in. Filing a lawsuit pauses the clock. The amount of time you have for the Prescriptive Period depends on the instrument that created the debt.
- 10 Years: generally used for contracts unless stipulated otherwise in a clause in the agreement or supplement, and for actions to enforce money judgments.
- 5 Years: promissory notes regardless of whether they are negotiable or not.
- 3 Years: open accounts, which include all credit cards, even though they are technically governed by contract (the credit card agreement).
In Louisiana, some statutes require a creditor to send an “amicable demand” before filing a lawsuit. This must be in writing with accurate information about the amount owed and the possible consequences for not settling the debt (attorneys fees, etc.). See Smiley Law Demand Letters.
Service of Process
Once you file a petition to bring a lawsuit for collections you will have 90 days to make a request for service of process. The sheriff of the parish in which the pleading is pending serves the papers to the debtor. If the sheriff cannot do so within 10 days of the request, you can file a motion to have a personal service processor serve the papers. This person must be above 18, not a party to the suit and not a resident of the state. Failure to request service of process can result in dismissal of your lawsuit.
Service of process can be accomplished by physically giving the defendant the service papers (personal service) or leaving them at the domicile of the defendant with someone else residing at the domicile who is of the age and capacity to give the defendant the papers. Corporations can be served by giving the papers to a registered agent of the company or the Secretary of State if such a person cannot be located.
In the next post we will discuss the various types of judgments and how to enforce them The Smiley Law Group has obtained many favorable judgments for our Louisiana commercial debt collection clients and more importantly obtained payment by enforcing those judgments. Call today for a free consultation.