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The Latest FAQs in the World of Commercial Collections and Litigation

The COVID-19 pandemic has impacted virtually every industry, including the world of commercial collections. As discussed in previous Weltman Alerts and Insights, state and federal governments implemented measures that restrained certain types of commercial collections activities. Several other factors have also shifted the way we do business. From e-filing to remote working and notarization, the litigation and recovery processes don’t always look the way that they did two years ago. Adjusting to these changes can be challenging, so we’re here to help.      

Attorney Nick Rohner and shareholders Andy Voorhees and David Wolfe answered your top questions regarding commercial collections and litigation in a recent Ask a Pro webinar. Moderating this interactive session was the director of commercial collections, Shawna Chambers. With more than 60 years of combined experience, this team of professionals are ready to help you and/or your organization’s commercial collection efforts.

Watch the full Ask a Pro webinar here.

Here’s a quick overview of our top four FAQs and their respective answers from this session. 
 

1. How has the pandemic impacted the litigation process – both temporarily and permanently?

COVID-19 has drastically impacted the legal industry. Local, state, and federal courts have made significant adjustments to their traditional processes. Of all of the changes, two of them rise to the top of our list: remote hearings and e-filing systems. 

Over the last two years, telephonic and virtual Zoom hearings became the “new normal” in courtrooms across the U.S. While the remote experience took some time to get accustomed to, it offers many benefits to judges, attorneys, and clients alike. The biggest upside: reduced time. Ultimately, less time means lower costs or legal fees for clients. 

So, what’s next for remote hearings if social distancing guidelines continue to ease? Ultimately, it depends on the judge or jurisdiction. For instance, some Indiana courts have indicated that they’ll continue to utilize virtual hearings regardless of the pandemic. However, in other states, such as Kentucky, many judges have advised that they prefer in-person attendance. Some courts may adopt a hybrid process, allowing virtual hearings for attorneys who request them. With that said, if certain cases call for witness testimony, the court may require in-person attendance. 

Another positive change triggered by the pandemic is e-filing, which greatly streamlines the process of filing court documents and allows users to file with any court in the state in which the system has a license to operate. Some courts adopted electronic record systems long ago, but many are still catching up and switching their files over. The state of Michigan currently has a few circuit courts with e-filing but there’s been talk in recent years of moving to a single, statewide system

While there are some convenience fees associated with e-filing, it’s much more efficient and cost effective than dealing with print documentation and case files. 
 

2. How does Remote Online Notarization (RON) work and how can you use it effectively?

RON is the process of notarizing a document remotely through the use of electronic signature, identity verification, audio-visual and electronic notarial journal, and record-keeping technologies. Instead of having to be physically present in the same room, this process allows notaries to notarize securely while also saving time and travel for themselves and the parties involved. 

To appear remotely via video, the notary and document signer must: 1.) see and speak to each other at the same time; 2.) the video/audio feed must be live and in real time; and 3.) the transmission must be secure from interception through lawful means by anyone other than the persons communicating. The notary also needs to keep record of all remote video notarial acts for a period of time. 

While some states (such as Arkansas) require that the notary be located in the same state as the signer, others do not have a physical location requirement. 
 

3. What documents are necessary for a commercial collections lawsuit?

It depends on the nature of your claim and your jurisdiction. The creditor must provide documents that establish the debtor’s liability – or that he/she agreed to pay the credit back. These documents may include a promissory note, guaranty documents, etc.

Keep in mind that not every jurisdiction requires the exact same documentation. In Michigan, the requirements are more basic. However, in Florida you must provide complete chain-of-title, a complete payment history, and any original documentation available. 
 

4. How do you testify in a deposition or trial if your organization didn’t originate the debt?

We often see these issues arise in mergers between banks or two companies, or with organizations that purchase debt in bulk. In order to testify, you need to prove that you are the new owner of the organization or the accounts receivable by showing: 
1.) The records of the prior organization were acquired as part of the purchase/merger; 
2.) That you rely on the accuracy of the records of the prior organization; and 
3.) That you’re keeping these records in the ordinary course of business. 

It’s critical to demonstrate that the accounts receivable of the prior organization are now your accounts receivable. An extra layer of proof, such as a bill of sale, establishes you as the new creditor. Ideally, your bill of sale includes debtors’ contact info, account numbers, amount of debt, and date of the debt. 

If you’re unsure as to the viability of your claim or documentation, you can seek the assistance of an attorney to ensure you have the proper pieces in place before filing a lawsuit with the court. 

For more comprehensive FAQs and insights about commercial collections and litigation, watch our Ask a Pro: Commercial Collections and Litigation – 2022 and Beyond. If you have additional questions that need to be answered, please contact our commercial collections team
 
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way. 

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Andrew C. Voorhees

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