Jump to content
Sign in to follow this  
the_GUNN_man

Law Suits

Recommended Posts

I am not really sure what heading to put this under so I will start here. I am going to keep the story short because it would take awhile to explain everything. I have a lady refusing to pay. We did the work last July and she hasn't paid. She tried telling me she wasn't satisfied with the work and didn't want to pay. The bill was $440. She agreed to the estimate. She did not sign the estimate but she doesn't have to. It would help my case a little but I will still win without the signature. She is refusing to pay because of something we didn't do that wasn't even in the estimate. She called us a day later complaing. We came back a second time and fixed the problem. Then I heard nothing for months. I just sent her my third notice. She called and offered to pay $250. I said no. She then offered $300 and I said no. I told her we don't give discounts. We fix the problem. Since she took so long and it is now winter there is nothing to be done. I am taking her to court. The filing fee is $60. I know I can add that to the bill. My question is what else can you add? This lady is not hurting for money at all. She is quite wealthy and I feel I should be compensated for having to wait 6 months for payment and the trouble of having to drive 40 miles to the court house, pay a filing fee, and having to go back to court with the guy who helped me on the job. Can I add for wages for an employee to have to show up? My gas and time having to drive a total of 160 miles to go to the court to file and then for the hearing itself? The cost of sending certified letters? I am not trying to get money that is not fairly owed to me. I just want full compensation for a job we did and all the headaches I am having to go through to get paid.

Share this post


Link to post
Share on other sites

Small claims vary by state, but I would venture to say that you will not be compensated for your time, your employees time or gas expenses (Ohio doesn't). Anything uncollected can be written off as bad debt.

You're generally not repaid for all your efforts put forth in collecting amounts under $1000. (my opinion)

Your better bet is to go thru collection agency and find out how you can impact her credit. When credit is impacted, they will normally pay up faster to clear their credit.

In the future, make sure a contract is signed for one and all jobs as this makes any potential court decisions a lot easier and faster.

Share this post


Link to post
Share on other sites

In California, your time or your employee time for court is not allowable but if on your signed invoice or proposal you mention a finance charge for over due accounts you can add that in your claim:

ie.

$440.00 + 1.5%/month ($41.12 for Aug - Jan)+ collection attempt costs.

Go to your local court house, they will give you everything you need, just make sure your business license is good before you start anything!

You can also fill out all the paperwork and send a photocopy to the deadbeat and tell them your filing in 3 days and it will cost them more if they wait.

Share this post


Link to post
Share on other sites

Here is the legal wording that is on my invoices. My accountant/part time lawyer came up with this and it helps a little bit on the really over due bills. This is for Maryland though and I'm sure each state has different laws.

By sending in this form you authorize Henry’s Housework Inc. to provide the requested work during the season that you have requested . Past Dues, or any part thereof, including prior Service Charges, are subject to a 2% per month (24% per annum) Service Charge. Service Charges are computed on an average daily balance. Collection costs and/or reasonable attorney’s fees are the responsibility of the customer/client. All payments received are applied in the order of: collection costs, attorney’s fees, service charges, and past due amounts. Any remaining funds are then applied to current amounts due.

I would love to know if anyone has found a collection agency that will do collections on accounts like ours let me know. All of the ones I have checked in to will only go after companies not individuals.

Share this post


Link to post
Share on other sites

We have had two customers in going on 8 years that have refused to pay. Thankfully we have learned by our mistakes by having them sign the proposal accepting responsibility after completion of job.

Needless to say, the two customers refused to pay for no other reason than they had planned this all along in my view. When these two happend it was just me and a helper. Since I did not have anything signed by customer agreeing to the services they almost got away with it.

I found out through this process that we could file a lien against their property. Check the county that the customer resides in. Both of these customers were in Anne Arundel for all you Marylanders. Needless to say, one customer tried to sell his house and had to pay me off prior to selling. HA HA.

The other still has the lien and probably does not realize it. They have not tried to sell.

FYI

Share this post


Link to post
Share on other sites

Our company here in New York,encounter at least 2 to 3 law suits each year on customers who don't want to pay,and we have won every single one in court.

1st start with your contract make sure you request a down payment 1st. (10% or 1/3 ). then put that at start of the work you are to be paid 1/3 and at the completion of the work the balance is due in full. in this way if your customer fails to pay you she then has breach the contract terms.

also recommend that in your contract you put in that at any time you may request customer to sign off on an reasurence of payment. this is done if you feel along the way that there may be a problem in being paid. you can also request it if a customer claims thier not happy with the work and you agree to take care of thier concerns but they must sign off asurring that you will be paid once concerns are taken care of.

another tip: make sure you docuement everything and invest in a camera to take pictures of before and after.

tip #2 put in your contract under warrenty that within (put a time frame) that if owner discover a workmenship problem they have x # of days to inform you and thier sole remdy will be to repair the defective portion of the application.

tip #3 always respond to a customer asap, by phone and then follow up by letter, if a customer does not want you back to take care of the problem and you have not been paid, send them a letter that you would like thier cooperation in allowing you to address there concerns immd.

Now you have 1= Breach of contract.

2= lack of cooperation

3= not being allow to preform

And if you have sent them a letter asking them for reasurrence of payment , and they refusse to sign it. the case is closed in your faver. make sure you have proof that you mailed out the letters thur by USPS proof of mailing cost about 90 cents.

HOPE THAT I HAVE HELPED.

SDI

Share this post


Link to post
Share on other sites

I used to work in a purchasing/receiving department of a company when I was in high school. The typical invoice had a line at the bottom giving finance charges at 30-day intervals for past due invoices. I think it went something like

30 days past due: 1.5%

60 days past due: 3%

90 days past due: 6% - 10% (this was to REALLY get their attention).

But this still does not solve the problem of a non-payer. I'm with One Call.....have a lien placed on their property. You could "threaten" to take it to small claims court and report to credit bureaus and see what happens. Whatever, plan a course of action and stick to it. Nothing shows more indecisiveness than wobbling around on your goal. I would not negotiate with her; it starts a bad precedent.

Ryan H.

Share this post


Link to post
Share on other sites

I would send her to a collection agency. If they collect, you normally pay $50 or so, if they do not, you pay nothing.

You can only get penality fees, etc if its in writing. You basically have a verbal contract. This will hold-up in court. A signed contract is so much better. If you have before and after pictures, that would be nice. Basically, you have to proof that the job you accomplished is satisfactory compared to the others in the same field.

Bottom Line - its cost you more to take her to small claims court than to not collect a penny. Add up your time and all the heartburn.

Most people will pay, when it comes to their credit.

Share this post


Link to post
Share on other sites

I agree with the above- I take before and after pics of every job. This alone will get their attention. "What are you doing?" they say. I say "for your protection and mine" Never had a problem. I save them on a disk for a year then delete them. Also the threat of a lean works. Don’t come down on your price. You did the work, they must pay.

Share this post


Link to post
Share on other sites

I've only been to small claims court once. I had pictures as proof to counter her claims. I did not think about charging for my time, etc. However, I was able to charge interest on the money due to me. Whatever you're going to sue her for, it must in the claim when you file it. You can't easily add it after the fact.

If you're not REALLY needing that money any time soon, go with the lien and forget about it. In Alabama it's called a Contractor's Lien. It will stay until they pay. It puts a "cloud" on the title of the property and that property CANNOT be conveyed (sold) to anyone until the title has been cleared.

But if you need that money now, sue her in small claims court. In Alabama you don't need a lawyer. It costs just a few dollars and if they fail to show up, 99.99% of the time the court will rule in your favor.

I really like alot of the suggestions in this thread. I'm takin' notes! Thanks everyone.

Share this post


Link to post
Share on other sites

The problem is with small claims court you can win the case but it still does not mean you get the money. You may have to end up garnishing wages to collect and this can take forever and a day.

And then if the jerk changes jobs it your responsibility to provide the court with new employment info. In the end it is the honest man that realy looses.:goodgrief

Share this post


Link to post
Share on other sites

GUNN-Man,

With all the choices out there, being right doesn't always get you the money you deserve. I usually like the path that makes me work the least to collect the already earned money (call me lazy).

Fortunately the IRS recognizes that most businesses have dealings with less than honorable cutomers and therefore allow you to deduct "Bad Debt" on your federal income taxes. Make sure you take the deduction for 2003. The year you get the money, you can add it as income.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

Sign in to follow this  

×