Debt Recovery

An average collection agency will recover about 20% of the total debt assigned. Some clients may get a 100% recovery rate, for others it could very well be 0%. Here are the most important factors which decide how much a collection agency will collect for you:

1. Collection Agency itself:

A collection agency that follows a friendly approach makes persistent contacts, follows legally complaint tactics, yet a firm approach will recover maximum money. They must know how to recover the debt diplomatically instead of forcefully. Debtors are less likely to pay when they feel threatened.

Since all collection calls are recorded, it is important for the management/supervisor to randomly examine at least a few collection calls daily and discuss shortcomings with their debt collectors. They must have at least a few bilingual debt collectors in order to recover from people who prefer talking only in Spanish. Their debt collectors must be located in multiple time zones in order to work with debtors nationwide.

2. Is your debt primarily Commercial (B2B) or Consumer (B2C)

Commercial debts have a recovery rate of around 75% on viable accounts. For consumer debts, this figure drops to approximately 12%. Factoring in both types of debts, the average recovery rate is about 20%.

3. Age of your debts

Accounts that are assigned around 90 days have an excellent recovery rate, while accounts that are older than one year have a poor recovery rate.

4. Your Industry

Commercial Debts: Nearly 75% recovery rate on viable debts.

These industries have a higher recovery rate: (Over 40%)
College/Universities/ Prof. School, Fuel/Oil/Propane, Printing, Lawn & Garden, Snow Removal, Business Services, Plumbing, Heating, Air, Engineering, Interior Design, Restoration, Publishing and Credit Unions.

These industries have a moderate recovery rate: ( 25%-40%)
Pest Control, Aviation, Media, Industrial, Optometrists, Dental, Personal Services, Funeral services, Repairs, Waste Management, Day Care, CPA / Accountants, Utilities, Government, Member Organizations, Farm Supply, Auto Dealers, Cleaning Service, Fire, Education Schools Misc., Telephone Communications, Elementary/ High School and Medical.

These industries have an average recovery rate ( 15% -25%)
Social Services Misc., Trucking, Veterinarian, Clothing, Manufacturing, Computer Services, Pharmaceutical, Medical supply, Drug Store, Newspaper, Rentals Equipment, Wholesale, Durable, Hotel, Non-Profit and Insurance.

These industries have a lower recovery rate: ( Below 15%)
Chiropractor, Nursing Homes, Banks, Bail Bonds, Property Management, Financial, Legal Services / Lawyers, Gym/Sports Organizations, Electronics, Moving/storage and Real Estate Agents.

5. Quality of your own debt:

If you primarily serve a lower income group, or if your state debt laws are favorable for debtors, then the recovery rate will be lower. Additionally, if your debt is too old then your recovery will decrease.

 

One of the most common questions business owners ask is: “How long should I wait before sending a past-due account to collections?”

The data is clear: The best time to assign an account is when it hits 90 days past due.

Waiting longer doesn’t “save the relationship”—it usually guarantees you will never get paid. Here is why the 90-day mark is the critical turning point for your Accounts Receivable.

1. The “Three-Cycle” Logic

By 90 days, you have likely sent three statements (30, 60, and 90 days). You have given the client a full financial quarter to resolve the issue.

• The Reality: If a client hasn’t paid after three “friendly reminders,” they aren’t forgetting—they are ignoring you.

• The Action: Sending another statement looks weak. Escalating to a third party shows you are serious.

2. Your Staff is Burning Valuable Time

Your internal team is hired to manage patient care, customer service, or sales—not to chase bad debt.

• The “Burnout” Factor: Asking administrative staff to make uncomfortable collection calls kills morale and productivity.

• Opportunity Cost: Every hour they spend chasing a $200 invoice is an hour they aren’t generating $1,000 in new business.

• Skill Gap: Your accounting department likely doesn’t know the specific nuances of the FDCPA (Fair Debt Collection Practices Act). If they say the wrong thing, your business could be sued for harassment. Pros know the law.

3. The “Decay Curve” of Debt

Time is the single biggest enemy of debt recovery.

• Statistical Drop: Research shows the probability of collecting a dollar drops significantly after 90 days. By six months, that dollar might be worth only 20 cents.

• First Mover Advantage: A debtor who isn’t paying you likely isn’t paying others either. The squeaky wheel gets the grease. If you wait, you fall to the bottom of their priority list behind the creditors who did hire an agency.

4. Change the Dynamic (Without “Alienating” the Client)

Many businesses fear that hiring an agency will ruin the client relationship. The opposite is often true.

• The “Bad Guy” Buffer: By hiring an agency, you keep your internal team as the “good guys.” You can tell the patient/client, “I’m sorry, our system automatically moves accounts at 90 days, it’s out of my hands.”

• Psychological Shift: A letterhead from a collection agency changes the tone from a “request” to a “demand.” The debtor realizes you are no longer asking nicely; you are enforcing a contract.

5. Financial Sense: Fixed-Fee vs. Contingency

Speed saves you money on the collection process itself.

• Early Assignment (90 Days): You can often use “Fixed-Fee” services (flat rate letters/calls) which cost a few dollars per account.

• Late Assignment (120+ Days): Once an account is “toxic,” you are forced into Contingency Collections, where you might lose 30% to 50% of the recovered amount.

• Tax Benefits: If the agency can’t collect, you have the documentation needed to write off the debt as a business expense on your taxes.

The Bottom Line: It is better to pay a small fee to recover the majority of your money now, rather than holding onto the debt and taking a 100% loss later.

Ready to stop chasing and start collecting?

Contact Us Today to discuss a strategy that fits your timeline.

The Myth of the “Ignored” Account: Professional Recovery in the Digital Age

In the modern healthcare and B2B economy, there is a persistent myth that if a balance is simply ignored, it will eventually vanish. For the professional practice or business owner, an unresponsive account is a drain on cash flow and a primary driver of staff burnout.

At Nexa Collections, we believe unresponsiveness is not a dead end—it is a signal to activate a more sophisticated, data-driven reconciliation process.

The Nexa Security Suite: Bridging the “Unresponsive” Gap

When internal reminders fail, our Account Reconciliation Team deploys a multi-layered strategy that moves beyond simple phone calls. We use “Respectful Friction” to ensure your practice remains protected while we resolve the outstanding balance.

1. Advanced Skip Tracing & Verification

“Hiding” is increasingly difficult in a connected economy. We utilize deep-dive skip tracing and USPS address verification to identify current contact information for patients or vendors who have moved or changed their details. We don’t just “chase” leads; we verify them to ensure every outreach is accurate and compliant.

2. Strategic Credit Reporting (The Non-Legal Lever)

For many, a credit report is the primary gateway to major life milestones—home loans, car financing, and employment screenings. We utilize Credit Reporting to major bureaus (Experian, TransUnion, Equifax for consumers; Dun & Bradstreet for B2B) as a powerful, non-legal lever. An unresponsive account that hits a credit report remains a barrier for seven years, often motivating a resolution when all other efforts have failed.

3. Pre-Legal Review & Judgment Enforcement

If professional mediation and credit reporting do not yield results, we activate our pre-legal layer.

• The Litigation Scrub: We screen every account for high-risk or litigious profiles before escalating, protecting your practice from counter-suits.

• Structured Enforcement: When litigation is recommended and approved, we pursue formal judgments. This can lead to wage garnishments or bank levies, ensuring that unresponsiveness has real, enforceable consequences.

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The “Peace of Office” Advantage

Once an account becomes unresponsive, it should no longer take up space on your front desk’s task list. By transitioning these accounts to our team, you achieve:

• Reduced Staff Burnout: Your team stops playing “private investigator” and returns to patient care and core operations.

• Reputation Safety: Every outreach is recorded and reviewed. We maintain a respectful, clinical tone that prevents the “review-bombing” often associated with aggressive agencies.

• Net-Zero Investment: With our $15 fixed-fee and contingency options, the cost of professional recovery is often neutralized by the revenue reclaimed—and is typically tax-deductible as a business expense.

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Frequently Asked Questions

Q: What is the risk of waiting too long to send an unresponsive account to collections?
A: Time is the enemy of recovery. As an account ages, the “paper trail” fades and the debtor’s sense of obligation diminishes. We recommend a “90-day rule”: if internal efforts haven’t worked by month three, it’s time for professional reconciliation.

Q: Can unresponsiveness be caused by a language barrier?
A: Frequently. Many accounts are “ignored” simply because the patient doesn’t fully understand the billing cycle. Our Bilingual (Spanish) Team removes this friction, resolving many “unresponsive” accounts through clear, inclusive communication.

When accounts hit the 90-day mark, it’s natural to feel frustrated. You might be tempted to hire a “pitbull” to get your money back by any means necessary. However, hiring a predatory or overly aggressive debt collector is a high-stakes gamble.

Today’s debtors are highly aware of their rights and the laws protecting them. With a few clicks, they can permanently burn your online ratings or hire a predatory lawyer to sue you for technical violations. In this environment, an “aggressive” strategy often costs far more than the debt itself.

The Bull vs. The Surgeon: A Strategic Comparison

Feature	The Aggressive “Bull”	The Strategic “Surgeon”
Primary Goal	Immediate payment at any cost	Maximum recovery + brand protection
Legal Risk	High (FDCPA/TCPA violations)	Low (Strict compliance-first workflow)
Public Image	High risk of negative viral reviews	Reputation remains intact
Long-term Value	One-time recovery; burnt bridges	Potential for future customer retention

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Why “Aggressive” Tactics Backfire

Times have changed. Debtors are no longer in the dark about their rights. Modern debt collection is governed by strict federal and state laws, such as the Fair Debt Collection Practices Act (FDCPA).

1. The $1,000 Legal Trap

A typical fine for a collection violation is $1,000 per debtor. Thanks to the internet, debtors can easily find “no-cost” attorneys who specialize in suing debt collectors. These attorneys take a cut of the settlement, and most courts issue unfavorable judgments for collectors who use abusive, unfair, or deceptive practices.

2. The 10 Disadvantages of Forceful Collection

• Damage to Relationships: Harassed customers never return.

• Reputation Harm: One bad experience can lead to negative viral publicity.

• Legal Risks: Crossing boundaries exposes you to lawsuits and fines.

• Increased Costs: Legal fees for defending a collector’s behavior often exceed the debt itself.

• Staff Stress: Employees may face moral dilemmas or deal with the fallout of angry debtors.

• Loss of Negotiation: Aggressive stances make debtors defensive and uncooperative.

• Escalation of Conflict: Antagonism draws out the process rather than settling it.

• Mental Health Impact: Unethical pressure causes genuine harm and fuels negative public perception.

• Impaired Objectivity: Forceful tactics often ignore the reality of a debtor’s situation.

• Market Perception: In small industries, your brand’s “tough” reputation can kill future partnerships.

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Case Study: The $50,000 Misunderstanding

A regional service provider hired an aggressive firm to chase a $2,500 debt. The agency used unauthorized robocalls. The debtor sued for TCPA violations.

• Result: The provider lost the $2,500 debt and paid a $45,000 settlement plus legal fees.

• Lesson: The cost of an aggressive agency is rarely just their commission; it’s the legal shadow they cast.

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The 5-Point Vetting Checklist

Before signing a contract, ask these questions to ensure your agency is a partner, not a liability:

1. “Can I see your SOC2 or HIPAA compliance certification?” (Proves they handle data securely).

2. “What is your ‘Member Tone’ policy?” (Ensures they speak to your customers with respect).

3. “Do you offer a ‘Soft-Touch’ letter phase?” (High-value, low-cost recovery before escalation).

4. “What is your litigation success rate?” (Better to have a scalpel than a sledgehammer).

5. “Are you licensed in all 50 states?” (Vital for national reach and compliance).

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Interactive Audit: Is Your Brand Safe?

• Do you know exactly what the agency’s letters say? (Yes/No)

• Does the agency record 100% of their calls for your review? (Yes/No)

• Is the agency transparent about their compliance training? (Yes/No)

If you answered “No” to any of these, your business is currently at high risk for a compliance audit or lawsuit.

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The Bottom Line

In an era of instant online reviews and “no-win, no-fee” consumer attorneys, the most aggressive agency is often the least effective. True recovery is built on persistence and professionalism, not threats. Look for a partner that treats your accounts receivable like the valuable customer relationships they are.

Nexa provides a reputation-safe approach, equipped with all 50-state collections license, offering free credit reporting, free litigation, free bankruptcy scrubs, and zero onboarding fees. Secure – SOC 2 Type II & HIPAA compliant. Over 2,000 online reviews rate us 4.85 out of 5. 

Need a Collection Agency? Contact us

Distribution runs on trust and terms. But when invoices slip past 30, 60, and 90 days, “normal AR” turns into a cash-flow leak. Your team resends statements. The buyer promises “next week.” Your sales team keeps the relationship warm. And the unpaid balance just sits there.

That’s where Nexa comes in.

We help distribution companies recover unpaid B2B invoices through a contingency-first collections model built for commercial relationships—firm, professional, and results-driven.

Trusted by businesses nationwide to recover millions in lost revenue annually. We combine a 80% success rate on viable claims with a diplomatic “Velvet Hammer” approach—ensuring you get paid without damaging valuable B2B relationships. 

Need a Commercial Collection Agency?  Contact Us Serving Hundreds of Businesses ! Easy to use • Fully Compliant with Federal and State Laws • USA Citizens-Only Team • 24×7 Secure Portal • High Recovery Rates • Over 20 years Experience • Free Commercial Credit Bureau reporting • Low fee • Highly Rated !

Why Distribution Companies Struggle With Unpaid Accounts

Most overdue distribution balances follow the same pattern:

• The buyer delays using “paperwork issues” or “pricing mismatch”
• Internal AR gets stuck in repeated reminders
• The customer stays active, but old balances remain unresolved
• The account ages until it becomes harder to collect
• Your business absorbs the loss through write-offs

The fix is simple: earlier escalation + better structure.

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Commercial Collections Pricing (Contingency-Based)

Most distribution businesses prefer contingency collections because it aligns incentives.

✅ Contingency Fee Range: 10% to 45%
✅ No Recovery, No Fee
✅ Fees are set in advance based on balance size, age, documentation strength, and complexity
✅ Higher balances + newer invoices typically qualify for lower rates
✅ After initial review, fee communicated to you in advance

This gives you predictable cost with professional action—without increasing payroll or burning internal time.

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~80% Recovery on Fresh Commercial Accounts (When Documentation is Strong)

Commercial recovery success depends heavily on timing and proof.

For fresher accounts—typically up to 200 days old—our partners consistently achieve ~80% recovery when the account is supported by the right backup documentation.

Examples of strong support:

• Invoice(s)
• Aging report / statements
• Proof of delivery (POD/BOL)
• Order confirmations or email approvals
• Signed credit application or contract terms (when available)

In distribution, documentation isn’t “nice to have.” It’s leverage.

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How NexaCollect Recovers Distribution Debt (Step-by-Step)

We don’t rely on aggressive scripts. We run a commercial recovery workflow that gets attention fast and keeps the conversation professional.

Step 1 — Intake + Documentation Review

We review:

• balance amount and age
• customer profile and behavior patterns
• dispute signals vs stall tactics
• documentation strength

If anything is missing, we tell you exactly what to pull so we can proceed with confidence.

Step 2 — Executive-Level Outreach

This is where most recoveries happen.

We contact the right decision-makers and clearly communicate:

• the balance details
• the delivery/terms basis
• the resolution deadline
• the available payment options

The tone stays firm but respectful. It’s not emotional. It’s business.

Step 3 — Dispute Control + Resolution

Distribution “disputes” often include:

• short shipment claims
• pricing adjustments
• missing paperwork excuses
• partial-payment delay strategies

We separate real issues from stalling. If the dispute is legitimate, we document and resolve it. If it’s a delay tactic, we escalate strategically until a settlement or payment plan is secured.

Step 4 — Credit Leverage (When Appropriate)

Business credit reporting can create urgency for B2B customers who care about:

• trade reputation
• supplier approvals
• financing relationships
• future vendor terms

When appropriate and permitted, this lever pushes action without needing court.

Step 5 — Legal Escalation + Enforcement

If the account requires legal action, escalation can move to:

• attorney demand
• litigation strategy (jurisdiction + cost logic)
• judgment pursuit
• enforcement tools such as liens or bank levies (where available)

Most accounts won’t go this far—but the ability to escalate strengthens the pressure earlier.

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What Distribution Accounts Are a Good Fit?

We’re strongest when the balance is tied to delivered goods and clear payment expectations, including:

• wholesale supply invoices
• net-30 / net-45 delinquency
• repeat buyer overdue balances
• partial payment patterns
• “promise-to-pay” loops
• older AR that stalled internally

If you can prove delivery and terms, you have a recoverable account.

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FAQs for Distribution Collections

1) What do you need from us to start?

At minimum:

• invoices and aging report
• customer contact details
• proof of delivery (if available)
  Stronger documentation = faster recovery.

2) Is it really “no recovery, no fee”?

Yes. Under contingency, if there’s no recovery, you don’t pay the contingency fee. Rates are agreed in advance based on the account profile.

3) How fast can you start?

Typically within 1 business day once the account details and documentation are received.

4) Will this damage customer relationships?

Handled poorly, yes. Handled professionally, it often restores clarity.

Our approach is commercial and respectful—designed to get paid while keeping the door open for future business.

5) What if the buyer disputes the balance?

We request proof, isolate the issue, and drive resolution. Real disputes get documented settlement paths. Delay tactics get structured escalation.

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Stop Carrying Unpaid AR Longer Than You Need To

Unpaid distribution invoices don’t improve with time. They get harder to recover, and they distract your team from growth.

NexaCollect gives you a structured commercial recovery system that:

• moves faster than internal AR
• applies professional pressure
• protects customer relationships
• and escalates to legal enforcement when required

Recover the balance. Protect your cash flow. Keep your operations clean.

Contact Us

Summary: Indeed! Individuals can be legally forced to pay their debts with their cryptocurrency, but the creditor must have a judgment which states that the debtor is obligated to pay off the debt, including any cryptocurrency they own. Knowing whether or not the debtor owns crypto like bitcoin is of course a challenge. That is why a creditor must attempt to file a legal suit in which the debtor must declare all his assets under oath when asked by the judge.

Debtors are legally bound to pay their liabilities like outstanding credit cards or unpaid bills etc. Creditors have the legal right to claim for debts, and in case of nonpayment, they must attempt to ask the courts to bind individuals or companies to pay back their dues with all their financial assets, including the debtors’ crypto assets. Laws differ from state to state. Therefore one must ask their local attorney for the best possible approach.

U.S. government regulatory bodies treat cryptocurrencies differently.

• Security and Exchange Commission (SEC) treats cryptocurrencies as securities,
• Commodities and Futures Trading Regulator (CFTC) considers cryptocurrencies as commodities, and
• Internal Revenue Service (IRS) claims digital assets like properties.

The creditors should vividly understand how various regulatory bodies define cryptocurrencies before claiming their debts to pay with the digital assets of debtors.

Let’s review what could cryptocurrencies had seized by the U.S. government earlier before?

There are several occasions when the regulatory authorities of the U.S. have seized billions of dollars worth of cryptocurrencies to stop tax evasion, money laundering, false filling of tax returns, and trading illegal goods.

Recently, CNBC reported that IRS had confiscated around $1.2 billion worth of cryptocurrencies this year. The U.S. Marshals Service is responsible for auctioning the U.S. government’s crypto holdings. So far, Marshals agent has seized and auctioned more than 185,000 bitcoins valued at over $7.2 billion—notably known auction of 30,000 bitcoins from the Silk Road. In June 2021, the U.S. government auctioned more than $21,000 of bitcoin, litecoin, and bitcoin cash to compliance tax liability.

The sale proceeds are deposited into the U.S. Treasury Forfeiture Fund and the other commonly known fund is the Department of Justice Assets Forfeiture Fund.

How do traditional payment methods work to collect payments?

Traditional payment method depends on centralization and the controlled influence of intermediaries. Users have no access to control and command.

Cash-based mechanisms build on a trusted system supported by the legal and regulatory bodies and are accepted mediums of exchange between judiciaries.

Contrary to this, decentralized distributed systems are trustless systems that do not rely on the parties; they depend on protocols that manage financial services.

Blockchain restructured the financial system in a decentralized way. The decentralized finance market DeFi has touched the peak of 89 billion dollars as of May 2021.

Here we discuss how U.S. traditional payment systems work and fit in the current legal and regulatory framework.

Alias walks into the restaurant to buy a cup of coffee. She can pay to the restaurant using multiple payment options. She can pay with provided below options;

• Cash
• Credit card / Debit card
• Mobile app including PayPal, Apple App, etc.

Cash is the preferred payment option. It doesn’t require the payer’s identity, but the main risks associated with cash are theft, loss, or carrying issues. The other preferred payment system is cashless payment through credit, debit card, or mobile apps.

 

Various payment options have different implications for payer and merchant.

Each payment method is accompanied by its own procedure and transfer rules from the buyer’s financial intermediary to the merchant’s financial intermediary body.

When the buyer makes the purchase, and the payment is delivered to the seller. Financial intermediaries should charge transaction fees, money can be theft electronically & transactions across borders takes plenty of time to execute due to the intermediary clearance settlement system.

The settlement process is complicated where goods or services are being exchanged against payments.

When the payer initiates the payment through Credit/Debit card, the merchant sends the transaction to a payer’s account to verify the payer’s identity, device, or transaction message connected to the payment system. In this way, the payer’s bank initiates payment to the merchant’s bank. This process also involves checks at various points, such as passwords, to verify the payer’s identity. The payer’s account provider verifies the identity of the payer before making the transfer of funds.

Then clear the payment to confirm the transaction before settlement. Finally, a receipt is issued to the payer when the merchant receives the funds. The amount is reconciled between two or more entities & finally, the payment process is completed.

When a payment transaction passes, it credits the merchant’s account and debits the payer’s account.

How does Blockchain work?

Blockchain is a digital ledger that keeps immutable or non-forfeitable records of transactions and distributes them across the network of computers or nodes on the Blockchain, eliminating the need for third parties or financial institutions to process payments.

Transactions on the Blockchain are cryptographically secured. The term cryptography is used for the hidden art of writing secret codes. Every transaction recorded in the block is duly time-stamped and added to the already existing Blockchain, making the blockchain chain.

Here is the infographic that describes how does Blockchain works?

How will Debtor pay his Debt to the Creditor in a decentralized way?

Let’s understand by giving a simple explanation of how blockchain process the debt payment transactions that contribute when to interact with Creditor’s wallet to share value transmission across distributed ledger network without an external intermediary, ensuring transparency between Debtor and Creditor.

Every user or node keeps two keys; a public key and a private key in the blockchain network. The public key is used to encrypt/lock the transaction, while the private key is used to decrypt/ unlock the transaction.

A debtor can either transfer the dollars into his bank account by selling his bitcoins/crypto using one of the crypto exchanges and then making the payment to the creditor or a collection agency.

Otherwise, the Debtor will pay his Debt & send a digital transaction to the Creditor in the blockchain network.

The Debtor would use the public key that belongs to the Creditor’s wallet address to encrypt or lock the transaction. The Creditor will decrypt this transaction using its private key matching its public key that Debtor has already used to send the transaction to the Creditor.

This transmitted transaction becomes encrypted using hashing algorithm encryption and a private key of Debtor to sign the transaction. Now, the transaction is encrypted or locked and digitally signed by the Debtor, ensuring that the transaction originates from the Debtor who is the actual owner of the transaction in the blockchain network.

The Creditor will use its private key of wallet address to decrypt or unlock the transaction.

Closing Remarks:

El Salvador is the first country in the world that accept Bitcoin as legal tender. Governments are formulating laws to adopt crypto-assets in financial streams widely.

Besides this, in May 2021, CNBC reported a seizure incident of 1.04430259 bitcoin from a hardware wallet belonging to an individual in Kansas.

Many Crypto banks are emerging in the sphere, and laws are under formulation to allow creditors to force the debtors to pay their bills using crypto legally.

References:

https://cointelegraph.com/news/crypto-assets-to-be-regulated-differently-in-the-us-potential-impact-on-industry

https://medium.com/cryptolawreview/crypto-debt-collection-c3825a8588ca

https://www.cnbc.com/2021/08/04/irs-has-seized-1point2-billion-worth-of-cryptocurrency-this-year-.html

https://www.alperlaw.com/blog/can-cryptocurrency-be-garnished/

https://en.wikipedia.org/wiki/Digital_signature

https://www.cnbc.com/2021/07/28/us-marshals-service-hires-custodian-to-hold-crypto-seized-in-criminal-activity.html

https://medium.com/technology-nineleaps/blockchain-simplified-part-1-6cc3079cfd24