Author Topic: When you are unpaid for a big job  (Read 1268 times)

jpdx

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When you are unpaid for a big job
« on: May 24, 2019, 10:23:20 PM »
Hello Mustachian business/legal experts. Along with about a dozen other contractors, I have an unpaid low 5-figure invoice for a job completed nearly a year ago. The company, which is an LLC based in California and owned by one individual, does not appear to have the funds to pay anyone.

What is the best course of action to get the money owed? I have a Demand Letter ready to go. I am willing lawyer up, but not sure where to start. Also not sure what good a law suit will do, because I don't know if the business/individual has any assets -- how does one find out?
« Last Edit: May 25, 2019, 02:54:18 PM by jpdx »

SwordGuy

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Re: When you are unpaid for a big job
« Reply #1 on: May 25, 2019, 11:10:21 PM »
If you did work on a house or vehicle that they owned you can put a lien against it.

You may get something when they sell if there is a financial institution involved in financing the sale.  Don't know whether you can force the sale of the asset or not.

Fishindude

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Re: When you are unpaid for a big job
« Reply #2 on: May 29, 2019, 11:48:03 AM »
Any chance you could get a face to face with the principal of the company that owes you to come up with a plan for payment?
people that don't pay their bills have a tendency to hide behind email and voice mail to avoid tough conversations.   Showing up on their doorstep and looking them in the eye forces the issue.

jpdx

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Re: When you are unpaid for a big job
« Reply #3 on: May 31, 2019, 12:55:07 AM »
That's good advice, but unfortunately we live in different states.

I'm going to start interviewing debt collection attorneys soon...

Fishindude

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Re: When you are unpaid for a big job
« Reply #4 on: May 31, 2019, 07:23:06 AM »
That's good advice, but unfortunately we live in different states.

I'm going to start interviewing debt collection attorneys soon...


For five figures, I could travel a bit.

Syonyk

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Re: When you are unpaid for a big job
« Reply #5 on: June 04, 2019, 08:44:36 PM »
If they haven't paid you, haven't paid a bunch of other people, and seem unable to do so...

Don't spend much money trying to get blood from a stone.  Write it off, count it against your business losses for the year, and move on.  It sucks, but if they simply don't have the money, there's not an awful lot you can do about it - and spending money on demand letters, lawyers, etc, doesn't help if there's nothing to collect.

And maybe ask for a deposit up front next time you've got a big job.  Treat it as the most normal thing in the world and see if they're willing to - if they kick back really, really hard, there's probably a reason.  I've also done "payment checkpoints" with some troublesome clients in the past - I do up to this point, they pay me for that work, and I don't do any more work until the payment for the previous segment is taken care of.

EngagedToFIRE

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Re: When you are unpaid for a big job
« Reply #6 on: June 20, 2019, 07:04:35 PM »
If they haven't paid you, haven't paid a bunch of other people, and seem unable to do so...

Don't spend much money trying to get blood from a stone.  Write it off, count it against your business losses for the year, and move on.  It sucks, but if they simply don't have the money, there's not an awful lot you can do about it - and spending money on demand letters, lawyers, etc, doesn't help if there's nothing to collect.

And maybe ask for a deposit up front next time you've got a big job.  Treat it as the most normal thing in the world and see if they're willing to - if they kick back really, really hard, there's probably a reason.  I've also done "payment checkpoints" with some troublesome clients in the past - I do up to this point, they pay me for that work, and I don't do any more work until the payment for the previous segment is taken care of.

This is correct.  And part of business.  I would get a debt collection agency that works with businesses, first.  They'll just take a cut if they collect.  I would probably avoid a lawyer, it's not worth the cost.  I've been screwed a few times, mostly by (previously) fortune 500 businesses that go bankrupt.  Heck, look up "preference payments" if you want to understand how disgusting this aspect of business can be.  You are probably screwed, next time take a deposit.  Think of it this way, you extended credit to this person, they aren't paying.  What are you really going to do about it?  Be more careful when extending credit in the future.

jpdx

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Re: When you are unpaid for a big job
« Reply #7 on: June 23, 2019, 09:17:20 PM »
The client recently sent over a partial payment (!), so I take that as a gesture of good faith. I'll do whatever it takes, legally, to get paid for this job. I won't give up, ever.

That said, I would love some additional insight on whether its better to use a debt collection agency or a debt collection attorney.

Perhaps its worth mentioning, although the client hired the entire team as independent contractors, this was almost certainly a misclassification. It's gray area in our industry, but many of us meet the test of being employees.

Syonyk

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Re: When you are unpaid for a big job
« Reply #8 on: June 23, 2019, 09:35:36 PM »
The client recently sent over a partial payment (!), so I take that as a gesture of good faith.

I'd interpret it more as, "This is about as much as you're going to get..." and put it on the back burner.

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I'll do whatever it takes, legally, to get paid for this job. I won't give up, ever.

And this, meanwhile, is just stupid.  Blood from a stone and all.  You're not hunting the great white whale in revenge.

You can very easily spend more than the invoice is worth trying to get paid.  That's stupid.  And it's a waste of time and mental space to get too upset about it.

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That said, I would love some additional insight on whether its better to use a debt collection agency or a debt collection attorney.

Scum sucking bottom dweller that will take most of the collected money vs... scum sucking bottom dweller that will take most of the collected money.  And will charge you for the privilege.  Neither?

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Perhaps its worth mentioning, although the client hired the entire team as independent contractors, this was almost certainly a misclassification. It's gray area in our industry, but many of us meet the test of being employees.

After they've gone bankrupt is the wrong time to be hashing these details out.

You're well in danger of throwing good money after bad.  They know they owe you money.  You spending more money to remind them will not magically create money for them to send to you.  You sending lawyers isn't going to conjure up the missing plans.  Etc.

Tack on your standard late payment percentage rates, send them an invoice every few months for the unpaid balance, and move on with life.

ender

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Re: When you are unpaid for a big job
« Reply #9 on: June 23, 2019, 09:39:27 PM »
Is your goal to get the full amount, regardless of what it takes?

Or is your goal to "win" and feel vindicated?

jpdx

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Re: When you are unpaid for a big job
« Reply #10 on: June 25, 2019, 03:12:11 PM »
Yes, my goal is to get the full amount. If this proves impossible, my goal is to get the full amount less reasonable expenses.

NorCal

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Re: When you are unpaid for a big job
« Reply #11 on: June 25, 2019, 04:50:00 PM »
Go in knowing what "reasonable" expenses are to you.

I once worked for a company that spent over $2M in legal fees trying to collect on a $350K invoice.

These things can suck up WAY more time and energy than they're actually worth.

Start with an attorney and a demand letter.  I'm no expert on bankruptcy laws, but make sure you're a creditor in-line for payment in case they file for bankruptcy.