What constitutes proof of debt for your insolvent customers?

On Behalf of | Sep 12, 2022 | Creditors' Rights |

Few things are more irritating than performing a service for customers or selling goods to ones who refuse to pay. After all, you did your part and expect your customers to do theirs. Still, even if they have little or no beef with you, some of your customers are slow to reach for the checkbooks.

You deserve to receive payment, of course. If your customer is insolvent, you are likely to have a much easier time collecting payment by having proof of debt.

The legal requirement

According to Ohio law, you must be able to prove to the liquidator that someone owes you money. While this may seem obvious, it is important. In fact, if you lack sufficient proof, the liquidator may not entertain your claim.

If your customer is insolvent, you should receive a notification letter from the liquidator. This letter puts you on notice of the liquidation process. It also asks you to submit proof of debt within a tight timeframe.

If you fail to do so, the liquidator can reduce your claim or reject it outright. Luckily, it is usually possible to appeal this rejection, but you need not let your claim get to that point.

Proof of debt

To prove your insolvent customer owes you money, you can submit work orders, contracts, receipts and other relevant evidence. If your evidence is not enough to convince the liquidator that your customer owes you money, the liquidator may ask for additional supporting material.

Even though you seem busier than ever, you likely do not have long to respond to a liquidator’s notification letter or request for more proof. Ultimately, if you plan to seek payment, it is advisable to gather as much proof of debt as you can even before you receive the notice of liquidation.

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