Businesses involved in alternative energy, renewable energy and energy conservation

Collection of Debts in Vermont
Our firm has over 30 years of extensive experience in helping businesses recover delinquent obligations, from debtors anywhere in Vermont.

Key to Success
The key to success in legal debt collection is securing assets or income of the debtor, out of which our client’s obligation can be paid. This can be done via lien, seizure, or other methods. In order to be able to do this, we first examine all of our client’s documentation on the account in question, to determine who the potential debtors are. (Is it just a corporation or LLC that operates the business? Or, have one or more of the principals signed a personal guaranty, or exposed themselves to personal liability in some other way?)

Once we identify the potential debtors on an account, we conduct an investigation of each of them (using a proprietary online database and other methods) to determine their assets and sources of income. Based on this information, we advise our client as to whether there appears to be a reasonable chance of recovery. If so, we start legal proceedings to obtain a judgment against the debtor(s). If the debtor does not resolve the obligation after being served with suit papers and a copy of the judgment; we then take legal steps to secure the debtor’s assets and income, in a way that would make them available to pay what is owed to our client.

Fees and Costs
Obviously, doing the work mentioned above, and taking legal action, involves attorney’s fees, investigation costs, Court filing fees, and Sheriff’s fees. However, our clients usually have a contract, purchase order, credit application, or some other document signed by their customer, which provides for recovery of these fees and expenses if the customer defaults on payment. Therefore, the judgment we obtain from the Court will include not only the principal amount of the obligation, but also interest, and the fees and costs involved in pursuing the debtor. Then, assuming the debtor has sufficient assets or income which we can secure, these costs plus principal and interest are ultimately reimbursed to our client.

Client’s Documentation
Because of the importance of having the right documentation signed by each customer, the first thing we do in working with a new client is to review the client’s existing documents, and suggest any changes which may be necessary to enable them to achieve full recovery against a customer who defaults on his obligation.

Mechanics Liens; Prompt Pay Act
Often, businesses in the renewable energy field provide a service or product which is used in a construction or remodeling project. If so, two aids to debt recovery are available, beyond those mentioned above:

Mechanics Lien: Under Vermont law, a mechanics lien can be filed - in the land records of the Town in which the property is located – within 180 days after the payment due date for the last stage of work or supplies provided by the creditor. The mechanics lien puts a hold on any sums which the property owner still owes to the business with whom the owner had a direct agreement. (This could be a general contractor to whom you are supplying product or services. Or, it could be you, if your company has debts directly with the owner.) After another 180 days, the hold expires unless the creditor brings suit in Court and gets a court-ordered attachment of the property.

Our role in pursuing recovery via a mechanics lien is to first determine exactly who owns the property and make sure it is the same party who signed the initial contract. We then prepare the lien document, naming the right parties, and file it in the land records. If the obligation is not resolved by the time the lien is close to expiring, we bring suit to convert the lien into a court-ordered attachment. The ultimate objective is to obtain a judgment in favor of our client, which can be foreclosed against the owner’s property for the sums still owed by the owner on the project.

“Prompt Pay” Act: If a property owner, or a contractor, fails to pay when due, an amount owed to a business who provided services or materials to the project – the debtor is liable for (a) reimbursement of the business’ attorney’s fees and costs in collecting the debt (regardless of whether the debtor is contractually obligated for this); (b) interest at the higher of the rate provided in the contract, or 1% per month (even if the contract had no interest provision); and (c) a penalty (in addition to interest) of 1% per month.

Difference Between Collection Agency and Attorney
Some businesses use collection agencies to recover obligations. However, a collection agency is limited to contacting the debtor by mail and phone, to try to persuade him to pay voluntarily. An attorney is not limited to that approach, and can take legal action to obtain payment directly from assets or income of the debtor.