Meet Our New President and CEO!

As many of our valued partners know, American Financial Management is a third-generation family owned business that specializes in commercial (b2b) collections. With our core values of Honesty, Empowerment, AFM Client Focus, Respect, and Teamwork, American Financial Management has been a leader of the commercial collection industry since 1964. It is with immense pleasure and excitement that we announce the start of a new chapter in our corporate history with the appointment of our new President and CEO, Alexander Rosen. As an Attorney with over 10 years of industry experience, a client-focused approach to collections, and an innovative, growth-driven mindset, Alex brings a unique set of skills, perspectives, and initiatives to lead American Financial Management into the future. Under Alex's leadership we will further hone our strategic direction, grow and develop our organization, strengthen our valued client partnerships, and build new and robust relationships. As always, American Financial Management remains committed to providing our clients with exceptional service and working tirelessly to achieve outstanding recovery results. We look forward to working with our clients toward a bright future and continued success.

May 26th, 2021|

#You’veBeenServed: Service of Process in One Hundred Forty Characters or Less

The decision to file lawsuit against a former client is never easy.  Credit managers consider many factors, including the account balance and likelihood of recovery, the prospects of a future business relationship, the impact to the creditor’s reputation in the marketplace, and not least of all, the costs associated with legal actions.  Too often, a major contributor to inflated legal costs are the archaic regulations dictating how and when to serve a complaint and summons.  A new Texas Supreme Court Order is poised to modernize this process and significantly reduce the time and expense of service and, thus, securing a judgment. On August 21, 2020, the Texas Supreme Court announced an amendment to the state’s Rules of Civil Procedure that authorizes civil courts to allow service of complaints, citations, and subpoenas via electronic means, including Twitter, Facebook, and/or email.  The move is in response to a general mandate from Texas legislature to fully incorporate technological advances into the state’s bureaucratic and judicial processes.  Although a handful of federal courts occasionally permitted service of process via social media as far back as 2016, such cases are far from the norm.   Most jurisdictions dictate that a defendant is properly served when a complaint is personally handed to a the individual or, in the case of corporate entities, to a registered agent.  In some cases, local rules also require that service of process occur at the specific registered agent address noted on a company’s most recent state franchise filing.  In instances where registered agents purposefully dodge service or a company’s annual franchise filings are not up to date, creditors are left with few options.  In theory, most jurisdictions have provision for alternative service, including service by publication.   To serve by publication, a creditor must publish an official notification of a lawsuit in a daily print newspaper that circulates in the county where the debtor resides or where the debtor business operates.  Jurisdictions require Plaintiffs to publish the legal notice for several weeks, and this can easily cost hundreds of dollars.  Nevertheless, as print newspapers become little more than relics of a bygone era, [...]

October 25th, 2020|

Small Business Bankruptcy in a Post COVID-19 World

As the ongoing COVID-19 pandemic creates upheaval in the lives of individuals and business, attention has been focused largely on the Coronavirus Aid, Relief and Economic Stimulus Act (CARES Act) and its refunding and enlargement. However, even before most businesses rushed to banks, flooding the Small Business Administration with Paycheck Protection and Emergency Disaster Relief loan applications, Congress passed the Small Business Reorganization Act of 2019 (SBRA) with little fanfare. The SBRA amended the existing Chapter 11 Bankruptcy Code to include a new Subchapter 5, which is geared to small businesses. Background and Eligibility: Although the SBRA seems tailor-made for the current economic climate, House Republicans actually introduced the bill in June 2019. The bill was largely a response to small businesses owners’ growing concerns about the massive costs and complexities of a traditional Chapter 11 Bankruptcy. The law went into effect on February 19, 2020. At inception, to qualify for Subchapter 5, a business’s debts had to fall below the $2,725,625.00 threshold. However, the CARES Act temporarily increased the maximum debt threshold to $7,500,000 for cases filed on or before March 27, 2021. Importantly, both debt caps exclude debts owed to insiders and affiliates. Key Differences: No Creditors’ Committee – In the past, a business was forced to undertake the long and complicated process of a traditional Chapter 11 reorganization if they desired to continue operations post-bankruptcy. The most daunting part of the reorganization process is usually the submission and approval of the actual reorganization plan. Specifically, the debtor is often in a seemingly endless battle with creditors, who are organized in a Creditors’ Committee, to approve the plan. The approval process alone can take several months to a year, with any secured creditor or major unsecured creditor having the power to veto the reorganization plan. In contrast, Subchapter 5 eliminates the Creditors’ Committee. Instead, the Bankruptcy Court appoints a Trustee to oversee the process of reviewing the debtor’s financial schedules and proposed reorganization plan. Further, a Subchapter 5 attempts to expedite and simplify the reorganization plan process by requiring the debtor to submit a reorganization plan within 90 [...]

May 6th, 2020|

The Legal Process – A Brief Overview

Most businesses avoid filing a lawsuit to resolve disputes.  However, judicial intervention is sometimes the only way to recover a debt.  As such, it is important that business owners and credit managers are aware of the basics of a civil action.  Generally, there are four stages to a legal action: 1) Pleadings/Service; 2) Discovery; 3) Summary Judgment/Trial; and 4) Post-Judgment Executions. Pleadings/Service: After a credit manager or business owner authorizes their attorney to file a lawsuit, their attorney will prepare a Complaint at Law.  A Complaint describes the facts of the given case and the legal theory they are suing the debtor under (i.e. breach of contract, unjust enrichment, fraud, etc.)  To help your attorney prepare the Complaint, it is critical to preserve and provide him with the following documents: 1) emails between the creditor and the debtor, especially those showing that the debtor agreed to the services and/or goods provided; 2) contracts or credit applications signed by the debtor, especially originals with “wet” signatures; 3) a statement of account showing all invoices and payments; 4) all unpaid invoices at issue; and 5) evidence showing that the creditor attempted to remediate any dispute the debtor raised. After counsel files the Complaint, a clerk of the Court provides the filed Complaint and a summons, which is an official notice of lawsuit and order to appear before the Court, to a Sheriff or private process server to serve upon the debtor.  Most states require service directly to the debtor.  If the debtor is a business, then the Sheriff or process server can effectuate service on the company’s Registered Agent.  If the debtor evades service, the Court may grant permission to serve the debtor via regular or certified mail or by publication (i.e. newspaper) or posting a copy of the Complaint and Summons on the debtor’s door. Once served, the debtor has usually 30 – 45 days to file a response (aka: an Answer) with, or appear before, the Court.  If the debtor fails to file an Answer or appear, then the creditor may request a Default Judgment.  If the debtor timely answers [...]

June 7th, 2019|Tags: |

Best Collection Practices for Financially Distressed and Out-of-Business Customers

When an invoice becomes past due, the goal of credit and collections professionals is to liquidate the claim most expeditiously or, secondarily, to learn the reason for nonpayment. But the methods one uses to do so can have dramatically different results. In AFM's September 2018 newsletter column, I shared some advice on how to complete recovery efforts when dealing with two of the most common reasons for nonpayment: customer disputes and promise-breaking customers. But what are the best actions to take when a customer is financially distressed or out of business? Read on. FINANCIAL DIFFICULTIES When a customer with past-due invoices claims it does not have the means to pay monies owed, immediately determine their proposal to satisfy their balance. You may not receive a concrete settlement offer, or you may not have the authority to accept what's proposed, or you may decide that it is not in your company's best interests to accept the customer's plan. Regardless, attempt to obtain a complete understanding of the customer's financial picture. Signs of distress may include decreased revenue or reduced personnel, payroll difficulties, numerous uniform commercial code (UCC) creditors, cautionary liens filed by UCC creditors, federal or state tax liens, legal proceedings, collection balances or other substantial liabilities. Much of this information can be learned during your call with the customer. To extract as much information as possible, ask open-ended questions. Before ending the conversation, ask for a recent tax return, balance sheet, profit-and-loss statement, and/or bank statements to help you evaluate their financial status and your next steps to maximize recovery. In addition, you can learn about the customer's financial status by reviewing state and federal court records, credit reports and financial statements. If the customer is experiencing severe financial hardship, it is most economical to quickly settle by securing an immediate lump-sum payment, even if the amount is less than the full amount owed. Another option is to enter into a payment-plan agreement. However, you need to protect yourself. For example, if the customer is incorporated and goes out of business, there will no longer be a party from whom [...]

March 11th, 2019|Tags: , |

Effectively Resolve Disputed Bills and Recover Monies Owed From Promise-Breaking Customers

When an invoice becomes past-due, the goal of credit and collections professionals is to expeditiously liquidate the claim or, secondarily, to learn the reason for nonpayment. The methods one uses to do so can have dramatically different results. Below are suggested recovery approaches that every credit and collections professional should utilize when handling two of the most common reasons for nonpayment: customer disputes and promise-breaking customers. By following the steps below, you will save yourself and your company time, money and may even grow the customer relationship. DISPUTED CLAIMS When you learn about an alleged dispute, it is important to immediately uncover the exact nature of the disagreement, obtain all information and documentation pertaining to it, and inquire about previous disclosures. A frivolous dispute usually arises to delay payment and is generally easy to recognize. Often, the first complaint of the dispute does not occur for months after the goods were delivered or the services were rendered. To resolve a dispute, conduct a comprehensive analysis and thoroughly respond to all elements contained therein. To do so: Extract as much information and documentation from the customer about the dispute; Become well-versed in your company’s services, if you aren’t already; Know your company’s reputation, which will indicate whether you should either settle or show no leniency; Attain critical customer information, such as their buying power; Determine how the contract was formed and the terms that governed the agreement; Investigate other significant file facts, such as any customer collectability issues. This dispute analysis will give you the tools to narrow the scope of the issues and shift the customer’s focus to the crux of the problem. That should expedite settlement of legitimate disputes or escalate the file if the dispute is meritless and the customer refuses to change their stance. When a legitimate dispute arises, your best option is usually to settle the case. A common approach is to segment the non-disputed portion from the disputed portion of the unpaid balance. That should allow you to extract full payment for the non-disputed portion and reach an agreement involving payment and/or credits for the [...]

August 14th, 2018|