After the service of process, a consumer has 20 days to answer the court before a default judgment is filed, but corporations are given 30 days to respond. There are a variety of ways to attempt to collect on a corporate debt. Collectors can freeze the bank accounts of corporations, file a writ to attach inventory or file a writ for a till tap.
When collectors file to freeze a corporate bank account, they usually try to catch the bank right before payroll to get the attention of management quickly.
To attach inventory is rare, but in this case, a sheriff would be dispatched to put tags on inventory at the business’s location. For example, if the judgment was for $10,000, the sheriff would tag enough inventory to equal that amount. Tagged items cannot be sold, and those assets are “frozen.” This would be similar to garnishing the wages of an individual consumer.
Filing a writ for a till tap is another antiquated practice that is rarely used. Again, say the debt owed is $10,000. The sheriff’s department would dispatch a deputy to the store site for the day. The deputy would stand behind the counter and watch the cash register, and at the end of the day, he or she would seize the profits made that day and take it to the collector. This is not necessarily used to collect the entirety of the debt, but to let the business know that you are serious about collecting and that they need to take the appropriate steps to make the debt a priority.
Settlements are often the best way to resolve a corporate debt for several reasons. Large corporations are usually concerned with keeping their names out of the news. A settlement allows the debt to be resolved quickly, without dragging out the process with monthly payments.
While the lender is usually the only person that would not want a settlement, cooler heads normally prevail in this situation. Lenders realize that they are more likely to get the largest amount of their money back by settling.