Use this debt collection guide to build a clear demand letter for New Orleans.
New Orleans Debt Collection Rights: Your Complete Guide to Collecting Money Owed
When someone owes you money and refuses to pay, frustration quickly turns to determination. Whether a former business partner owes you for services rendered, a friend hasn't repaid a personal loan, a customer's check bounced, or a tenant left owing rent, Louisiana law provides remedies for collecting legitimate debts. Understanding these legal tools empowers New Orleans creditors to pursue what they're rightfully owed.
Debt collection in Louisiana operates under both state and federal rules. Louisiana's Civil Code establishes the foundation for contract enforcement and debt recovery. The state's court system provides mechanisms from small claims through district court for various claim sizes. Federal laws like the Fair Debt Collection Practices Act govern professional debt collectors, though different rules apply to individuals collecting their own debts.
New Orleans presents unique considerations for debt collection. The city's diverse economy spans hospitality, tourism, professional services, and more, each with different debt patterns. Orleans Parish courts handle debt collection cases regularly. Understanding local procedures, from proper service of process to judgment enforcement, helps you collect efficiently.
This comprehensive guide covers Louisiana debt collection law, the practical steps for pursuing payment, the evidence you need to prove your claim, and the legal remedies available when debtors refuse to pay. Whether you're owed a few hundred dollars or tens of thousands, this guide provides the knowledge you need to pursue collection effectively.
Louisiana Debt Collection Laws: Understanding Your Rights in New Orleans
Louisiana's debt collection framework includes statutory provisions, civil code articles, and procedural rules governing how creditors can pursue payment.
Louisiana Civil Code Article 1906 defines a contract as an agreement by two or more parties whereby obligations are created, modified, or extinguished. When someone owes you money, it's typically based on a contract (express or implied). Understanding the nature of your agreement establishes the foundation for collection.
Louisiana Civil Code Article 1994 makes obligations enforceable. The obligor (debtor) is bound to render the obligee (creditor) what is owed. When the obligor fails to perform, the obligee has remedies including judicial enforcement.
Louisiana law allows recovery of interest on debts. Louisiana Civil Code Article 2000 provides that when the object of performance is money, damages for delay are measured by the interest at the legal rate. Louisiana's legal interest rate is set by statute, currently one percentage point above the prime rate. Contract interest rates may be higher if specified in the agreement.
The Louisiana Money Services Act (La. R.S. 6:1081 et seq.) and related consumer credit statutes regulate lending practices but generally don't restrict private debt collection. However, usury laws limit interest rates that can be charged on certain loans.
Prescriptive periods (statutes of limitations) limit how long you have to sue. Louisiana Civil Code Article 3499 establishes a ten-year prescriptive period for personal actions, which includes most contract claims. Open accounts (like running credit tabs) have a three-year prescriptive period under La. C.C. Art. 3494. Promissory notes prescribe in five years under La. R.S. 10:3-118. Once a debt prescribes, you can no longer sue to collect it.
The Louisiana Code of Civil Procedure governs court proceedings for debt collection. Chapter 2 addresses proper venue (generally where the debtor resides). Chapter 6 addresses proper citation and service. Following procedural rules is essential; technical failures can delay or defeat collection efforts.
For collecting judgments, Louisiana law provides several remedies. Louisiana Code of Civil Procedure Articles 2291-2455 govern execution of judgments. Available remedies include wage garnishment (La. C.C.P. Art. 2411 limits garnishment to 25% of disposable earnings), bank account seizure, property seizure and sale, and judgment liens on real property.
The Fair Debt Collection Practices Act (15 U.S.C. Section 1692 et seq.) regulates third-party debt collectors (collection agencies, debt buyers, attorneys collecting for others). However, FDCPA does not apply to original creditors collecting their own debts or individuals collecting personal debts. If you're collecting your own debt, FDCPA restrictions don't apply to you.
Louisiana's Unfair Trade Practices Act may apply to debt collection in some circumstances. Abusive or deceptive collection practices could trigger LUTPA liability. Maintain honest, professional conduct in collection efforts.
Orleans Parish courts handle debt collection cases. The City Court of New Orleans has jurisdiction over civil matters up to $50,000 but also handles small claims up to $5,000 with simplified procedures. Orleans Parish Civil District Court handles larger claims. Understanding which court to use and its procedures is essential for efficient collection.
Step-by-Step Guide to Collecting Debts in New Orleans
Collecting money owed requires systematic action from initial demand through judgment enforcement. This guide walks you through the process.
Before pursuing collection, confirm you have clear documentation of the debt. Gather contracts, promissory notes, or other written agreements, invoices, statements, or bills, records of goods or services provided, communication acknowledging the debt, and evidence of partial payments. Calculate the exact amount owed including principal and any applicable interest. Ensure you can prove both the existence of the debt and the amount.
Check whether the debt is still within Louisiana's prescriptive period. Most contract debts have a ten-year period. Open accounts have three years. Promissory notes have five years. Calculate from the date the debt became due or the last payment/acknowledgment. If the debt has prescribed, you cannot enforce it through court.
Before escalating to formal collection, attempt direct communication with the debtor. Phone calls and informal requests sometimes produce payment. Document these attempts, noting dates, times, and what was discussed. Some debtors pay when reminded; others need more pressure.
Prepare and send a formal demand letter. Include your identification as the creditor, the specific amount owed with calculation, the basis for the debt (contract, services, loan, etc.), a deadline for payment (typically 10-15 days), and notice that you will pursue legal action if not paid. Send via certified mail with return receipt requested. The demand letter creates documentation and often prompts payment from debtors who fear court.
If the debtor responds with a willingness to pay but claims inability to pay in full, consider payment plans. A structured payment plan with specific amounts and dates, documented in writing, may be preferable to lengthy litigation. However, don't accept vague promises; get specific commitments in writing.
If the debtor doesn't respond or refuses to pay, file a lawsuit. For claims up to $5,000, use City Court of New Orleans small claims procedures. For larger claims up to $50,000, use City Court regular procedures. For claims over $50,000, file in Orleans Parish Civil District Court. Your lawsuit should include the amount claimed, basis for the debt, and demand for judgment.
Louisiana law requires proper service of process on the debtor. The sheriff or a private process server can effect service. Improper service can delay your case or result in dismissal. Ensure service is completed correctly and proof of service is filed with the court.
If the debtor doesn't respond to your lawsuit, you can request a default judgment. If the debtor contests the case, a hearing or trial will determine the outcome. Present your evidence clearly: the agreement, the amount owed, the debtor's failure to pay. If you prevail, the court will enter a judgment in your favor.
A judgment is only as valuable as your ability to collect. Louisiana provides several enforcement mechanisms. You can garnish wages (up to 25% of disposable earnings), seize bank accounts, seize and sell non-exempt property, and record the judgment as a lien on the debtor's real property. Enforcement often requires additional court filings and, sometimes, discovery to locate the debtor's assets.
Maintain meticulous records of every step: copies of demands, proof of mailing, court filings, service records, and any communications with the debtor. These records support your claim and enforcement efforts.
Essential Evidence for New Orleans Debt Collection: Building Your Case
Building a successful debt collection case requires comprehensive documentation proving both the existence and amount of the debt.
Critical Deadlines for Debt Collection in Louisiana
Understanding Louisiana's prescriptive periods and procedural deadlines is essential for successful debt collection.
Key Takeaway: Act Before Prescription
The most critical deadline is the prescriptive period. Track your debts and file suit before they prescribe. Waiting too long can eliminate your ability to collect.
Common Mistakes to Avoid in New Orleans Debt Collection
Effective debt collection requires avoiding common errors that can delay or prevent recovery.
The biggest collection mistake happens before collection efforts begin: not getting written agreements or keeping records. Verbal agreements are enforceable but hard to prove. Always get contracts, invoices, and acknowledgments in writing.
The longer you wait, the harder collection becomes. Debtors move, change jobs, and dispose of assets. Prescription periods run. Pursue collection while debts are fresh and debtors are locatable.
Some creditors jump straight to litigation without sending demand letters. A demand letter often produces payment and, if not, documents your efforts. Always send formal written demand before suing.
Incorrect venue, insufficient pleadings, or improper service can delay or defeat collection. Understand court procedures or consult an attorney. Technical errors waste time and money.
Debtors often promise to pay "soon" or "when I can." These promises mean nothing. Get specific commitments in writing: amount, date, consequences for default. Don't let negotiations drag on indefinitely.
Obtaining a judgment is only half the battle. Many creditors assume debtors will pay once judgment is entered. Most won't. You must pursue enforcement: garnishment, asset seizure, liens. A judgment without enforcement is worthless.
While FDCPA doesn't apply to individuals collecting their own debts, abusive collection tactics can create liability under other laws and undermine your case. Maintain professional, lawful conduct.
Some debts cost more to collect than they're worth. Filing fees, attorney costs, and time expenditure may exceed the debt amount. Evaluate whether pursuit makes economic sense.
Losing documentation of your collection efforts weakens your case. Keep copies of everything: demands, court filings, and correspondence. Organized records support your claims.
Recording your judgment creates a lien on the debtor's real property. If the debtor owns or acquires property, the lien must be satisfied before they can sell or refinance. Always record judgments with the Orleans Parish Recorder of Mortgages.
Frequently Asked Questions About Debt Collection in New Orleans
Louisiana's prescriptive periods vary by debt type. Most contract debts have a ten-year period. Open accounts (running tabs) have three years. Promissory notes have five years. Calculate from when the debt became due or the last payment/acknowledgment. Once the period expires, the debt is unenforceable.
Yes. If your contract specifies an interest rate, that rate applies. Without a contract rate, Louisiana's legal interest rate applies (currently one percentage point above the prime rate). Interest runs from when the debt became due.
The City Court of New Orleans handles small claims up to $5,000 with simplified procedures. You can represent yourself in small claims. For claims up to $50,000, City Court has jurisdiction with regular procedures. Claims over $50,000 go to Civil District Court.
Louisiana provides several enforcement mechanisms: wage garnishment (up to 25% of disposable earnings), bank account seizure, property seizure and sale, and judgment liens on real property. Enforcement requires additional court filings. The judgment is valid for ten years and can be renewed.
Yes. Under Louisiana Code of Civil Procedure Article 2411, you can garnish up to 25% of a debtor's disposable weekly earnings (earnings after mandatory deductions). You must first obtain a judgment, then file garnishment paperwork with the court and serve the employer.
Inability to pay doesn't eliminate the debt. You can still obtain a judgment and pursue enforcement over time. Consider whether a payment plan makes sense. Judgments last ten years and can be renewed, so you can enforce when circumstances change.
For small claims up to $5,000, you can represent yourself. For larger claims, attorney representation is advisable. Some attorneys handle debt collection on contingency or for reasonable fees. Weigh the cost against the amount to be recovered.
If you're collecting a legitimate debt using lawful methods, countersuit risk is minimal. However, if the debtor has claims against you (e.g., you failed to perform under your contract), they could assert those claims. Ensure your own performance was proper before suing.
What to Expect When Collecting Debts in New Orleans
Understanding realistic collection expectations helps you plan your approach effectively.
Many debts are collected without court action. A well-crafted demand letter, demonstrating you're serious about collection, often prompts payment. Debtors who understand you'll pursue court action sometimes pay to avoid that hassle and expense.
Settlement is common. Debtors may offer partial payment to resolve the matter. Consider whether accepting a discount is preferable to prolonged collection efforts. A certain payment today may be worth more than an uncertain full amount later.
Court proceedings take time. From filing to judgment can take weeks to months depending on whether the debtor contests the case. Contested cases require hearing or trial. Even default judgments take time to process.
Judgment collection can be challenging. Many debtors lack attachable assets. Wages can be garnished, but the debtor must be employed. Bank accounts can be seized, but the debtor must have accounts with funds. Some debtors are "judgment proof" - technically owing but practically uncollectable.
Persistence pays. Debtors' circumstances change. The judgment is valid for ten years. A debtor with no assets today may have assets next year. Continue monitoring and pursuing enforcement when opportunities arise.
Costs factor into value. Filing fees, service costs, attorney fees, and your time all have value. Consider the net recovery after costs. Sometimes settling for less produces better results than protracted litigation.
New Orleans Debt Collection Resources and Contacts
New Orleans creditors have access to various resources:
1. City Court of New Orleans
Handles civil claims including small claims up to $5,000 and regular civil claims up to $50,000.
First City Court: 421 Loyola Avenue, Room 101, New Orleans, LA 70112
Phone: (504) 407-0471
Second City Court: 727 S. Broad Street, Room 114, New Orleans, LA 70119
Phone: (504) 407-0522
2. Orleans Parish Civil District Court
Handles civil claims over $50,000.
Address: 421 Loyola Avenue, New Orleans, LA 70112
Phone: (504) 407-0600
Website: www.orleanscdc.com
3. Orleans Parish Sheriff's Office (Civil Division)
Handles service of process and judgment execution.
Address: 1401 N. Claiborne Avenue, New Orleans, LA 70116
Phone: (504) 822-8000
4. Orleans Parish Recorder of Mortgages
Record judgment liens against debtor's property.
Address: 1340 Poydras Street, Suite 860, New Orleans, LA 70112
Phone: (504) 658-9100
5. Louisiana State Bar Association Lawyer Referral Service
For finding attorneys who handle debt collection.
Phone: 1-800-421-5722
Website: www.lsba.org
6. Southeast Louisiana Legal Services
Free legal assistance for income-eligible individuals.
Phone: (504) 529-1000
Website: www.slls.org
The Debt Collection Playbook
Proof is Power
Contracts, invoices, texts, emails… gather all evidence of the debt.
Time is Your Ally (and Their Enemy)
Interest accrues. Late fees may apply. The longer they wait, the more they may owe.
Track Every Penny
Principal, interest, late fees… don't miss a dollar.
The Debtor's Options
Many states allow you to recover collection costs, including attorney fees in some cases. Know your rights.
Louisiana Debt Collection Laws
Applicable Laws
- FDCPA
- Louisiana Unfair Trade Practices Act
Small Claims Limit
$5,000
Consumer Protection Agency
Louisiana AG / CFPB
Collection Combat FAQ
When should I send a demand letter?
After the second broken payment promise. Don't let them string you along indefinitely.
What if they ignore my demand?
Small claims court is your next step. The filing fee is often recoverable, and you don't need a lawyer.
How do I prove they owe me money?
Contracts, invoices, text messages, emails, bank transfers, promissory notes, or witness statements all help prove the debt.
Can I charge interest?
Yes, if your contract includes interest terms. Even without a contract, many states allow pre-judgment interest on debts.
What about collection costs?
Many contracts allow recovery of collection costs and attorney fees. Check your agreement and state law.
Is there a time limit to collect?
Yes. Statutes of limitation vary by state and debt type, typically 3-6 years. File suit before the deadline expires.
What if they claim they already paid?
Demand proof. Bank records, cancelled checks, or receipts should show payment. If they can't prove it, they still owe you.
About FreeDemandLetter
FreeDemandLetter provides free, AI-powered demand letter generation with location-specific legal citations. Our content is reviewed by subject matter specialists and regularly updated to reflect current laws. We help thousands of people resolve disputes effectively—but we're not lawyers, and this isn't legal advice. For complex situations, consult a licensed attorney in your jurisdiction.