Debt collection in USA
Trump’s first year as President has been controversial even though the economy has remained stable. But how to handle missed or late payments?
If from a political point of view, the first year of Donald Trump as president of the USA has been controversial, the data published by the BEA (Bureau of Economic Analysis) confirm the solidity of the US economic framework.
In fact, the U.S. economic outlook is healthy according to the key economic indicators. Actually, the most critical indicator is the Gross Domestic Product which measures the nation’s production output. The GDP growth rate is expected to remain between the 2% to 3 % ideal range. Unemployment is forecast to continue at the natural rate.
There isn’t too much inflation or deflation, so this is Goldilocks economy.
President Trump promised to increase economic growth to 4%. That’s faster than is healthy. Growth at that pace leads to an overconfident irrational exuberance. This creates a boom that leads to a damaging bust. The factors that cause these changes in the business cycle are supply, demand, capital availability, and the market’s perception of the economic future.
The U.S. GDP growth will rise to 2,8% in 2018 and to 2,4% in 2019. That’s according to the most recent forecast released at the Federal Open Market Committee meeting on June 13th, 2018. This estimate takes into account Trump’s economic policies.
From this meeting it also emerges that the unemployment rate will drop to 3.6% in 2018, and 3.5% in 2019 and 2020. That’slower than the Fed’s 6.7% target. Janet Yellen – Previously President and CEO of the Federal Reserve Bank and Chair of the White House Council of Economic Advisers under President Clinton – admitted a lot of workers are part-time and would prefer full-time work. Also, most job growth is in low-paying retail and food service industries. Some people have been out of work for so long that they’ll never be able to return to the high-paying jobs they used to have. Structural unemployment has increased. These data are unique to this recovery.
Yellen admitted that the real unemployment rate is more accurate. It’s double the widely-reported rate.
As regards imports, America imported US $2.409 trillion worth of goods from around the globe in 2017, up by 7.2% in the last two years.
From a continental perspective, 45.9% of America’s total imports by value in 2017 were purchased from providers in Asia. North American trade partners supplied 25.9% of import sales to the US while 21.1% worth originated from Europe.
More precisely, the United States imported the following categories of goods from the rest of the world:
- Electronic equipment: $356.8 billion
- Machinery: $349.1 billion
- Vehicles: $294.6 billion
- Mineral fuels including oil: $204.2 billion
- Pharmaceuticals: $96.4 billion
- Medical, technical equipment: $86.2 billion
- Furniture, lighting, signs: $67.2 billion
- Gems, precious metals: $60 billion
- Plastics: $54.9 billion
- Organic chemicals: $46.1 billion
So, the fast growing US imports in the last year have been pharmaceuticals up by 52.3%; aluminum up by 49.3%; fruit, nuts up by 45.1%; lead up by 44.2%.
Fundamental to commercial exchange are these partners: China, Mexico, Canada, Japan, Germany, South Korea, UK, Italy, India and France.
Therefore China is in first place as it has exported to the US the value of $562.2 billion or 21.8% of its overall imports. From China, America imports into these product sectors: electronic equipment ($150 billion); machinery ($112.4 billion); furniture, lighting, signs (34.8 billion); toys, games ($26.7 billion); plastics ($17.6 billion); vehicles ($15.6 billion); knit or clothing ($14,9 billion) and footwear ($14.8 billion).
But how to manage Debt Collection?
As concern the risk of Insolvency, it is now a well-consolidated practice to activate the extra-judicial approach for the debt collection due to extraordinarily high forensic tariffs and also because legal fees and default interest are almost never recoverable from the debtor.
Even if a judicial action is used, a very high percentage of legal actions does not arrive until the trial but is concluded in a short time by a transaction.
Creditors in possession of a certain, payable and non-contestable credit, faced with the certainty of anticipating legal costs without any possibility of being able to recover them, prefer to terminate the dispute quickly even though this involves the waiver of a portion of their credit.
In the USA there is no appeal for an injunction but it is necessary to propose an ordinary cause introduced with the deposit and notification to the defendant.
The legal process then involves a phase of discovery, which is a subsequent mandatory mediation and, just as in case of failure of the latter action, we can proceed with the civil trial.
Invenium, thanks to its many years of experience overseas, is able to assist and support Companies all over the world that have receivables to be recovered in the USA.