One of our most frequently asked questions is, “What can they take?” Most of the time, the call comes from a panicked business owner in the midst of a collection action. To answer, let’s consider an all-too-familiar scenario where a small business owner ignores past due invoices and repeated phone calls from a creditor attempting to collect a past due balance.
In a final act of futility, the creditor turns the matter over to a collection agency or in this case, the Sheriff’s Office. The collection effort has just escalated. In the mean time, the debtor experiences a false sense of relief as the collection attempts cease while the legal wheels turn. Then, at the creditor’s discretion, the Sheriff pays a visit.
In one variation of this scenario, the business owner not only ignored repeated collection attempts by the creditor, but also disregarded registered and regular mailings from the Sheriff serving notice of intent to collect. This also included a missed opportunity to declare “Exempt Property” from the collections action. Sadly, that omission just gave the creditor the opportunity to seize any assets necessary to retire the debt. Up to and including tools, fixtures and equipment essential to business operations.
By ignoring these important notices, the business owner waived the opportunity to identify and declare all assets that are legally exempt from a collections action. If ever faced with collections, it’s crucial to know exactly what property is exempt from seizure. It is important to note that laws vary from state to state. For this discussion, we’ll consider a few basic examples that must be verified for each state.
A form of transportation and a home would be considered examples of Exempt Property. Also, tools of the trade are protected under the general premise that a tradesman or professional can no longer generate income without certain assets.
The best course of action, if you feel you’re facing a collection action, is to literally take stock in what you own, determining what tools, assets, fixtures and equipment are essential to conduct normal business. With that list in hand, search online or contact an Emerge180 Commercial Debt Restructuring (CDR) Specialist about Exempt Property laws in your state. Then – if the time ever comes – disclose all assets, even if they’re exempt. The discovery of undisclosed property undermines any remaining good faith and compromises your ability to negotiate a more favorable settlement.
Knowing what property is exempt goes a long way to peace of mind.