This has been an interesting week for civil trials at Hanover Law. A common theme was - "I want my money, bitXX!" (ahem). Namely, how do you collect money owed to you for work done?
First, let me caution you that obtaining a lawyer to go after money that is owed to you is often not a good idea. We attorneys tend to charge a minimum of $1500 to go to trial, and unless you can expect to get at least double that, a civil suit to collect money is likely a bad choice. A good attorney will always discuss whether a suit makes sense for you -- and be sure to ask about fees and the likelihood of success. Oddly, hand-in-hand with this, we have had to turn down clients that absolutely wanted to sue, even if they would lose money doing it. Revenge and anger are poor motivators for legal action. NOT because they can't be legitimate and proper, but because they tend to cool llloonnnggg before trial is ever had. As such, the client wakes up 6 months into the battle, only to realize they are paying a lot of money for legal representation and will likely get nothing but some form of visceral satisfaction at the end (i.e. no money!).
So how can you collect? The proper procedure is (1) demand letter, and (2) small claims court. You are the creditor (the person owes you money). The person who owes you money is called the "debtor". Initially, you need to contact the person that owes you money. Ask them politely to pay you what they owe. Give them 5 business days. If that fails, send them a letter (demand) indicating the amount due, the reason for the amount, the conversation you had on the phone, and your intention to sue them if they fail to pay. Give the debtor 15 business days (three weeks) to pay. If that fails, pay $75 to the clerk of the district court, and file a small claims action against the debtor.
On the date of the trial, go to small claims court and present your case. Small claims is very informal -- you are not bound to any rules of evidence, and the judge is free to discuss the case openly with you and the other party. The judge will encourage you to try to settle with the debtor first. That might mean accepting less money, but getting paid immediately. Or perhaps you will need to finish what you started and the debtor will pay the court. When you complete, the court will pay you (called a bond). If you can't settle, the judge will hold an informal trial. Each side will be able to show why it should prevail. Be sure to bring your evidence!
Evidence includes things like bills, hours on the job, proof of work, or a contract.
If the other side does not show up -- then ask for a default judgment. This allows you to win automatically once you show sufficient evidence to prove a valid claim.
After you have a judgment, you write to the debtor again. You ask them to please pay the judgement, or you will place a lien on their property. A judgment lien may be placed against the debtor's house, car, or other real property. That last step is a little tricky, but a quick call to a local attorney can be helpful at this stage -- and since the trial is now over, the cost is significantly less.
If you have an outstanding amount that is owed to you -- contact Hanover Law. We can discuss ways you can help yourself in small claims court, or if the amount is sufficient, we can help win the case for you. We also specialize in collecting on judgments. While this service is not free, we have an excellent collection ratio!
Sean R. Hanover, Esq