What are the legal parameters pertaining to debt collection from an LLC?

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What are the legal parameters pertaining to debt collection from an LLC?

Our company, a limited liability company, has been making regular monthly payments to another company for product received. Even though they accept our payments, they still hired an attorney to collect, who in turn filed a lawsuit and placed a restraining order on our bank account. Is this legal even though we have been making regular payments every single month? Is there any recourse we can take against these actions?

Asked on April 22, 2011 under Bankruptcy Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You say that you have been making regular monthly payments; however, are those the payments you were supposed to make? I.e., have you paid all amounts due, when due? If not, then the other company may take action against you. While it is in many ways commendable to pay what you can, when you can, the law does not recognize good intentions. Instead, if you have not paid according to the agreed-upon terms, you are in default; and when in default, the other party may take legal action against you, as this one has been doing.

On the other hand, if you have been making the agreed-upon payments, then the other party should not be able to do this and you should be able to get the restraining order vacated and have a good defense to the lawsuit.

so the issue is not whether the payments are "regular"--it's whether they comport with the terms under which you purchased the product.


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