small claims court experience needed

[huggytree]

Ive got another dead beat....same story as always....doesnt respond to phone calls or letters.....and i found out he's gone to another State to find work and left his family here....

he will be getting a final payment notice early next week....threatening small claims court or a lien on his customer....its only for $450 and i made decent $ on the project, so this one isnt killing me.....but im not giving it up either

in the past i took the Lien the customer approach (mainly because of the dollar amounts involved and the fact that i wanted to use the homeowner to create pressure on the builder)........this time its a customer i like and have done work for since....so im not going to try to lien them or threaten them....i am going to let them know im owed $$ and that they have no warranty until the builder pays me....i want them to create 'some' pressure on him to pay...

i almost want to go to small claims court for the experience...sooner or later ill end up there and i want to know how it works....next time it may be for $5,000 and i want to know how the system works ahead of time

1. can i add the filing fees onto my final amount owed?
2. what if he doesnt show up?
3, what if i win....how do i collect?

i have kept track of every phone call and every late invoice letter....and ill try to get a written letter from the homeowner saying the job is complete

i dont assume i can lose....i have a signed contract from him..

i dont think he will show up if he's out of state

i assume this guy doesnt have $450

[billbenson]

Is this really worth the trouble?

[SteveM]

I took a carwash vendor to court once for a few thousand a couple of years ago. Here is what I found...

1. In my state, you can claim filing fees to the amount owed if the court rules in your favor.
2. If the defendant doesn't show up, you automatically win.
3. If you do win, the law will not help you collect, so good luck.

In my situation, we won the case, which ended up being little more then a moral victory and a lot of wasted time and travel. The company we sued filed bankruptcy and changed their name to get back in business. I even requested the court to have the County Sheriff serve them personnally, which he tried to do, but no one at the "new" company would accept the papers or claim responsibility. My judgement died right there on the doorstep.

[huggytree]

Is this really worth the trouble?

ill spend $1000 to get $450 any day.... thats my attitude and thats why ive never lost.....and id do it

[Steve B]

You will win. If they don't show up, you automatically win. All filing fees can and should be added to the amount you are asking for (unfortunately, your time is not allowed to be valued).

Collection process will vary by state. In PA one time, I finally collected when the Sherrif showed up to take inventory for the Sherrif Sale. In KY, the collection isn't as easy. I have a guy that never paid even after he was served the judgement, but he will never be able to apply for credit anywhere without this unpaid debt showing up forever and ever and ever.

Of course it's worth it. Without people like you (and me) think how many more deadbeats there would be.

There is a financial limit to Small Claims (varies by state). $5,000 may be above the limit - hence the term "small" claims.

[huggytree]

thanks for the encouraging words Steve......just think how bad your life has to be not to have $450 sitting around.....a while back i had a guy not able to pay $200 for a few weeks...how can you be in business and not have $450 in your back pocket

When i call him I will be nice about it and ask for partial payment or trade for personal belongings.....i had a guy a while back making monthly payments to me...he owed me $3,000 and would send $1,000 a month to get caught up....i understand times are tough and im willing to take monthly payments or even the family X-box if need be.....but these types typically just ignore my calls/letters......the last one said it was because of pride...he couldnt accept the fact that he was broke

im not worried about my time......i may waste 1/2 a day in court....but ill learn how the system works and stick it to the guy.......if he doesnt pay id be happy with giving him a bad credit rating.......i also have 1.5% interest per month accruing....so no matter what he will always owe me MORE

[nealrm]

just think how bad your life has to be not to have $450 sitting around You say this in one post and in another you talk about taking him to court and loosing $1000 to get a $450 judgement you know you can't collect. You know the guy has been forced away from his family to try and get work, yet you are still trying to punish him. I'm sorry guy, but this is saying something about you and it's not good!

Even if you win the court case, it's not going to get you want you want. It probably won't make him pay, it's not going to make his credit any worse than it is now, and in 5 years it will drop off his credit report. All you really are doing is kicking a man when he down.

[lucas.bowser]

You say this in one post and in another you talk about taking him to court and loosing $1000 to get a $450 judgement you know you can't collect. You know the guy has been forced away from his family to try and get work, yet you are still trying to punish him. I'm sorry guy, but this is saying something about you and it's not good!
The scorched earth policy is a little harsh, and if this was a homeowner down on their luck I would agree with you. However, the way I read this is Huggy acted as a sub on a project. The Contractor got paid by the homeowner, but didn't pay him his contracted amount. The first person the GC should have been paying was his subs, not himself, if for no other reason you owe it to your clients to make sure your subs get paid. I currently have a lien filed against my home because a GC didn't pay his sub, after he got paid. So who gets stuck holding the bag, either me or the sub. The law says it's going to be me eventually if the GC doesn't make good.

As far as the judgement dropping off his credit, it will stay on his credit report potentially as long as Huggy wants it to or until 7 years after he pays it. Unpaid judgements stay on your credit report for 10 years. If the district he lives in allows him to refile the judgement every 10 years, Huggy can continue to keep it on his credit report until it is satisfied.

[nealrm]

It's 7 years or until the statue of limitations runs out, which ever is greater. In some states, judgement are renewable. However, the effect on his credit will diminish with time. After 5 years it will have little effect, after 10 years almost none.

I read it the same as you Lucas, this is a contractor that is down on his luck. Apparently he is trying to find work, so this isn't a case of being lazy. Given the rather small amount we are taking about, I'm guessing he is choosing to making sure his family has shelter and food rather than paying his subs. Maybe it's the optimist in me, but if someone is willing to seek out work even if it separates him from his family, then I believe he will pay his bill with or without a judgement. For $450 I'm willing to make that bet rather than add woe to someone that is already struggling. In the long run, I have found trusting people and giving a helping hand to pay far better interest than any investment.

[huggytree]

the General GC WAS PAID...he has my MONEY....the homeowner gave him $450 to pay me!!!....he spent it....or stole it....no i dont feel bad for him

he's not returning phone calls....that makes him a bad guy....he's pretending he doesnt owe me....

if he called me and said 'im down on my luck and dont have it'.....id say 'ill take something in trade....an X Box, Guns, Electronics, etc'....im willing to bargain....i DO feel bad that he's most likely down on his luck....but that doesnt mean he can take money from a homeowner that was meant for me....if the local DA wanted to he could put this guy in jail for 'theft by contractor'....

how will the homeowner feel about this situation???? will they just say 'oh well'.....remember if i am not paid their work has no warranty....if they call me with a leaky faucet tomorrow they are on own their own paying someone else $200 to fix it......how will they feel when i contact them

when a person ignores the situation they are in and screws others i feel no pitty for them.....they are the bad guy.....ive done nothing wrong except want to get paid

[nealrm]

I'm not saying you or the homeowner should be happy about it, nor that you should not want to get paid. Nor am I saying that you should just write off the money. I am stating that taking the guy to court is the wrong way to collect this debt, that it is unlikely to achieve the results you desire, that is sends the wrong message out to others and in the long run is counter-productive.

[huggytree]

to me it says im tough on collections and dont F with me....which is exactly how i want my company to be viewed...in fact its most likely the reason ive always collected while most other subs have lost thousands over the past few years...

if someone doesnt answer the phone or respond to letters whats the correct method of collecting?

[lucas.bowser]

It's 7 years or until the statue of limitations runs out, which ever is greater. In some states, judgement are renewable. However, the effect on his credit will diminish with time. After 5 years it will have little effect, after 10 years almost none.
You're right about that, I was not specific enough. The majority of states have it as 10 years or more, so I usually think about it as a 10 year minimum if you don't pay it. Wisconsin is actually 20 years (I just looked it up). In regards to credit score, you are correct it has a diminishing impact on credit score. Do not however confuse that with the credit decision, of which score is only a part. Judgments and their relative size are factored in to the decision beyond score because they are a liability that may supersede yours in the case that a future collection action arises. Each lender's underwriting practices can vary in how they treat this.

As far as the amount he has not paid, yeah that may be what he has chosen to do at the expense of contractual commitments and the welfare of others. Blatantly, it's stealing. As a business owner he had a legal obligation to pay his sub before he paid himself. Ethically speaking, it's no different than stealing from your neighbor because you don't have enough money to eat or make rent. You appropriated for your own use that which did not belong to you. I may understand why you did it, but that doesn't make it right.

As far as the optimist comment, I'm probably a little jaded. As a landlord for 10 years I was stiffed multiple times by people who decided that they had the right not to pay at times for various reasons. My favorite was the year someone decided not to pay be because their son had to have a Wii for Christmas. I have heard so many excuses, that I tend to just roll my eyes when I hear about such things, especially if there is no personal connection. The next time one of them pays what they owe me, will be the first time. I still help people out when I can, but it still causes me to pause and think.

[nealrm]

Yes, loosing money happens. On one hand you are out $450 + court cost + having a rep for being heartless, on the other hand you are out $450. In addition, some of the people that hear this story will not do business with you because of it. Do you really want to lose other jobs because you pursued a small debt into court?

On the collection I would keep trying. Call and send letters to both the home and business addresses. Send the letters in standard white envelopes with no return address. In the collection letters and voice messages, clearly state that you are willing to work with him to develop a payment plan to resolve this debt. Don't call more than every 2 weeks. Be pleasant. This approach does work. I have turn delinquent accounts into fully paid account using this. Some of those customer are my most loyal and the amount of word-of-mouth advertising I get from them is 100 more than I every would have received in court.

[huggytree]

im glad to be known as heartless w/ collections and all the things that go along with it.....im thrilled actually.....if you dont want to pay or intend not to pay me i want you to know that i will spend $1000 to collect $450.....i see no down side

what i find works best is telling the prime contractor that your going to contact the homeowner.....that threat has only failed me once....one time it turned someone who didnt answer the phone into someone who drove across town w/ a check 30 minutes later....more than likely that threat will work once more.....if not a screaming homeowner will most likely work pretty well too......im sure they will be furious...

basic phone calls and letters are a joke to someone intent on not paying...every 14 days i call and write...after 45 days late i go nuclear-all out

[billbenson]

In this case I agree with what you are doing. I wouldn't do it because any given phone call I miss could cost me a lot more than $450. I got a call from General Motors today that looks like I have a $100k order. I'd say I have an 80% shot at that order. That would be my largest order ever in my business.Even just doing it on principal the ROI wouldn't be worth it for me.

Have you tried a strategy of offering to take $100 a month payments instead of small claims court? It does sound like he figures you just plain won't go to court though and that is pretty much theft in my book.

[nealrm]

How overdue is this account?

[huggytree]

coming up on 45 days

i cant offer him any deals like the $100 a month...because he wont return calls....offering it on his answering machine looks weak and thats not how i need to look right now....yea id be THRILLED to take $100 a month....problem is....he will do it once and then im back to begging again just to get another $100.....so i cant do it...i need to settle it 100% because i most likely wont get a 2nd chance...

ive been through this same situation probably 5-7x before....ive never had to go to court yet......the worst time was over $2,500 and the homeowner was also working against me...i filed an intent to lien on her and she wouldnt sign for it....i did get my money, but i had to get the city inspector to basically shut the job down and not allow anyone else to finish the plumbing....he told anyone applying that i hadnt been paid, so what plumber would complete the work??? no one... he paid me and then months later asked me to work for him again....i found out he was a felon and burned his own house down for insurance $$....this is the type of people i run into....lots of trash in the trades

it will most likely work itself out in the next week or 2...next week i threaten to go to the homeowner....95% chance that will end it

[huggytree]

It does sound like he figures you just plain won't go to court though and that is pretty much theft in my book.

he has no idea yet what im willing to do....right now im just the guy sending letters and giving reminder calls....i havent threatened anything or even sounded anything more than firm(if even that)....ive been my usual nice self on the phone....next week that will end and i will start my bag of tricks to get paid

[huggytree]

In this case I agree with what you are doing. I wouldn't do it because any given phone call I miss could cost me a lot more than $450. I got a call from General Motors today that looks like I have a $100k order. I'd say I have an 80% shot at that order. That would be my largest order ever in my business.Even just doing it on principal the ROI wouldn't be worth it for me.



congrats on the work....my largest job is $40,000.....$100k would be awesome

i wont lose any work over this.....i may have to work 1/2 a Sat. to catch up, but i wouldnt do it if it cost me $$...i typically bring $1000-2000 in a day...so $450 is worth 1/2 a day even if it does cost me a bit of my weekend

[nealrm]

Is that 45 days from the invoice date or is there terms like "net due in 30 days"?

[huggytree]

Is that 45 days from the invoice date or is there terms like "net due in 30 days"?

45 days over due...so its 75 days since work has been completed....and 70 days since he was paid by the homeowner

[huggytree]

Called the contractor today...told him that in 7 days i will be contacting the homeowner and starting the lien process.....guess what? he called me back in 2 hours and said the check is in the mail TODAY.....we will see, but most likely my threat has worked yet again.....

[Steve B]

I hope the check arrives and congratulations. It's all just a game - the guy is going to pay the people that plan to make him accountable for paying. He'll obviously skip paying anyone that doesn't force the issue. What a great reputation you are building - if you use Waukesha - you actually have to pay him!

[huggytree]

4 days and no check

if it doesnt arrive on Monday he will get a 'final notice' letter and 1 more phone call

in 7 days i call the homeowner

[huggytree]

6 days and no check...i send out the 'final notice' letter today and called him for the last time

he called back angry, swore a bit at me, said he didnt care if i called the homeowner and said the check went out 3 days ago and the mail in SD is just slow

anyone from SD??? why is your mail slower than the mail here in WI?

i couldnt be nicer to this guy over the issue...i talk nice and respectful to him, act friendly and give him lots of options of how to pay if he's broke....and i get yelled at in return and lied to

1 week until i call the homeowner and end this

[Steve B]

What are you waiting for. 6 days ago he said the check went out THAT day. Now he said it went out 3 days ago (with no explanation why he lied about it).

[huggytree]

i have never set an 'exact' date and i like to give 2nd,3rd chances i guess.....i really dont want to go through with it and each time i call i get more direct

the letter i sent spells out exactly whats going to happen and when

i wont be calling him or writing him again.....the ball is in his court 100% now

75% chance ill get my check is what my gut says

if not i think its a 95% chance after the homeowner calls him screaming...i will also let the homeowner know that they can get the DA to prosecute him for theft by contractor....typically i have to go through this for $150 owed.....at least this time its more than gasoline money...even though $450 isnt worth me thinking about this guy 3x a day like i do now.......its all about the point of not losing or being ripped off....its not about the money and hasnt been for a week or 2

[huggytree]

got my check today

threw out his company job folder...i wont be working for him again if he offers someday

i have 1 other slow payer thats been paying in installments....sounds like my final check from him will be next week..he's already 90% paid

i may actually be up to date on all invoices by the end of next week.....spring always brings out the slow payers

[Haup9]

Glad you got paid finally. What a hassle to get have to go through to get $450.

[huggytree]

Glad you got paid finally. What a hassle to get have to go through to get $450.

typically when i go through this its over $150-200.....i no longer work for realitors, so it doesnt happen often anymore....Realitors need you NOW, but then dont want to pay later....horrible customers