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Scott Shepherd
01-04-2015, 10:40 AM
We have a customer that just will not pay their bills. We stopped doing work for them some time ago and they owe us what I consider a substantial amount of money. They dispute nothing we say, they don't dispute owing us the money, they just won't pay it. In the last 12 months, I think they have made 3 small payments on it, with the last one being probably in the summer some time. We have repeatedly asked for a detailed plan on when they plan to pay us and they refuse to do that. They will say "We're sending out a check at the end of this week", and then they send nothing. When it doesn't come and we contact them, they just refuse to answer us. So we'll lose contact with them for another month or so.

The last thing I want is to give 1/2 of what's due to some collection agency or lawyer, unless it's the last play in the book. In talking with a customer of ours, they said "file a judgement against them, we do it all the time". They said it doesn't cost anything, you just go to the courthouse, file it, then it goes before a judge, if you show the documentation from the invoices due, along with email correspondence, then the judge will take action against their bank accounts and/or property.

Anyone have any experience with this? Is that how it all works? Does it work?

We'll probably contact our lawyer tomorrow about it, but I'm hoping to gain some insight into it all before then.

Rich Riddle
01-04-2015, 10:59 AM
It's fairly straight-forward to file a claim in court against an individual, business, etc.. Most times the judge will allow you to add the cost of attorney fees and filing/court charges. How judgments are handled depends upon the state in which you file the claim. The other type of judgment you are discussing is similar to a mechanic's lien or a contractor's lien on a title to a home. Those are fairly straight-forward as well, BUT if you are in Virginia the lien must be filed within 90 days after the completion of the last work. In other words, if you haven't worked since last summer on the project, the time limit for a simple contractor's lien has passed....unless of course you do a bit more work on the project to restart that date. If you are in Virginia, look at the following link with whom I have no affiliation. It explains the process well.

http://www.fullertonlaw.com/construction-law-survival-manual/mechanics-liens-in-virginia.html#c

Scott Shepherd
01-04-2015, 11:19 AM
Thanks Rich, we can't do the contractor's lien because it's a balance due for a number of smaller projects, none tied to any particular large construction project. Last year we started down the construction lien against another company and they immediately paid us. Didn't have the money for 8 months, then we told them we were going to file a construction lien and they had the money right away. Some people just love to use other people's money until the pain is too great from the consequences and then they'll stroke the check.

These 2 customers have been valuable lessons on how we conduct business. This is the last one out there we need to clean up.

Is a judgement the right thing to do in this case?

Jerome Stanek
01-04-2015, 11:42 AM
I had a customer that owed me a large sum and couldn't file a lien either as the time limit was up I called them and told them that I was filing a dispute with their customer as they did a lot of work for them. they ended up making payments and stretching it out over 2 years. My son filed a small claims against a dog breeder and won but she wasn't about to pay so he garnished her bank account and got his money. Boy was she blind sided and made a big stink at the small claims court and the judge told her it was all legal as the court did the collection and she would be held in contempt if she didn't drop it.

Steve Rozmiarek
01-04-2015, 11:51 AM
I've been granted a judgement for a business deal gone bad. It was an exercise in frustration. All the judgement does is allows you to file a lien, levy, garnishment, etc. That sounds great, but if the debtor is insolvent and has secured debt, they likely outrank your lien position. That means that a judgment by you will cost you legal fees, which can be billed to the debtor, but if they are on the way to bankruptcy, you will be stuck with those too. I've seen the best success in collections come from aggressive goodwill negotiations. They will much more likely figure out a way to pay a friend before they will someone who is doing their best to make their lives miserable.

A judgement may also force them to become insolvent if they are struggling for legitimate reasons. In that case, a little goodwill can be the difference between them being bankrupt and you losing all, and them making it and you getting paid.

My personal opinion, the money is probably lost already, and it is probably a poor investment to pay lawyers to chase it. Each case is different, but it is possible that an understanding of their position may give you an idea on how to get paid. It's easy to just be mad, it does little good though.

Rich Riddle
01-04-2015, 11:57 AM
A judgment is the way to go. You can try to do it yourself if you want. That would be my initial advice. If the other party shows up with an attorney, then I would ask for a continuance in order to find your own attorney. It looks like each party is responsible for his own attorney fees in Virginia which is typical in the states (American Rule) versus the loser paying for all attorneys (British Rule). It won't cost you much to file and the following site outlines the process in a fairly simple manner:

http://www.valegalaid.org/resource/taking-a-civil-case-to-general-district-court-2?ref=OnlrJ

People can be jerks with your money. Sorry to hear you are going through that process.

Mike Null
01-04-2015, 12:28 PM
I was taken to small claims court by a moving company for failure to pay their invoice. (it was under $1000) I won the case as they tried to make me pay nearly twice what the estimate was for a moving job. I didn't use a lawyer but the judge made them pay court costs.

I also called the sheriff on them as they "misplaced" my table saw under some moving blankets in their truck. "they weren't trying to steal it--it was an honest mistake" which they didn't discover until i called the sheriff.

Scott Shepherd
01-04-2015, 12:35 PM
I've seen the best success in collections come from aggressive goodwill negotiations. They will much more likely figure out a way to pay a friend before they will someone who is doing their best to make their lives miserable.

A judgement may also force them to become insolvent if they are struggling for legitimate reasons. In that case, a little goodwill can be the difference between them being bankrupt and you losing all, and them making it and you getting paid.

My personal opinion, the money is probably lost already, and it is probably a poor investment to pay lawyers to chase it. Each case is different, but it is possible that an understanding of their position may give you an idea on how to get paid. It's easy to just be mad, it does little good though.

We've tried to be understanding. Sadly, they are a known, established business, been around for a long time, with a long history of robbing Peter to pay Paul. I've known people that work there and they tell me many times before pay day, they pull a number of them to take apart scrap in their lot to take it to the recycle place for cash, just to pay the payroll. That's been the case for a number of years now. I've done all I can do to try and be reasonable and make arrangements to get paid and work it out. Being nice and understanding isn't working. They seem to take that as a weakness and an excuse to pay others and not us.

They took the work we did, installed it all, and got paid for those jobs, so they got their money, we didn't. They spent "our" money on something else, but that's not my issue.

I think working with them for almost a year now to get paid has been nice enough. I'm done with nice. I want our money.

Steve Rozmiarek
01-04-2015, 1:16 PM
We've tried to be understanding. Sadly, they are a known, established business, been around for a long time, with a long history of robbing Peter to pay Paul. I've known people that work there and they tell me many times before pay day, they pull a number of them to take apart scrap in their lot to take it to the recycle place for cash, just to pay the payroll. That's been the case for a number of years now. I've done all I can do to try and be reasonable and make arrangements to get paid and work it out. Being nice and understanding isn't working. They seem to take that as a weakness and an excuse to pay others and not us.

They took the work we did, installed it all, and got paid for those jobs, so they got their money, we didn't. They spent "our" money on something else, but that's not my issue.

I think working with them for almost a year now to get paid has been nice enough. I'm done with nice. I want our money.


You may be better served to go after them. Sounds like they have a cash flow problem. If it is an LLC or Inc, you are stuck chasing the company assets, if its not, you can go after personal assets. Would be in your best interest to determine where the money in the company is, and go after the entity that has it if possible. Long operation means practically nothing for cash flow. Little decisions kill companies, this one sounds like it's dying from something that happened a while back to me.

Wade Lippman
01-04-2015, 1:31 PM
I don't know about VA, but around here you can only get a judgment by winning a lawsuit. I suppose they might not show up and you will win by default, but my experience is that never happens.

You can get court costs and interest, but have very little chance of legal fees; at least around here. Like everyone said, if they have nothing, you won't get paid, even if you win. Your lawyer will still need to be paid.

The advice to get an attorney if they show up with one is a bit confused. I presume he is thinking of small claims court, as you will surely know ahead of time if they have a lawyer in a higher court, and you will probably need an attorney to handle the paperwork in a higher court. In scc, around here anyhow, you can't sue with an attorney, and I doubt you could get adjournment to hire one anywhere. If you don't come prepared, you lose.

Scott Shepherd
01-04-2015, 2:19 PM
I don't know about VA, but around here you can only get a judgment by winning a lawsuit. I suppose they might not show up and you will win by default, but my experience is that never happens.



Wade, it's my understanding that you file a judgement with the courts, then they are served with the papers, with a court date. We show up in front of a judge, present all the open invoices, details of the work, and email communications. The judge reviews it, if it finds they owe the money and nothing is in dispute, then he does something (can't remember what it's called), which puts a flag on all their banking accounts, and alerts anyone if they are applying for credit. It also allows the judge to seize the assets or money to get it paid for.

I know that's the rough view of it, but that's the general idea on how it's been explained to me. The guy that told me about it said it was very common, nothing to it, it's done all the time for people that won't pay.

Wade Lippman
01-04-2015, 3:34 PM
No, that is called a complaint. If you win, you get a judgement.
It is then your problem collecting; the judge has nothing to do with it.
I have always gotten paid promptly, but my understanding is that you have to hire a professional to collect otherwise.
Here the limit is $3,000 in town courts and $5,000 in city courts; maybe $50 to file.
As always, VA might be different.

Scott Shepherd
01-04-2015, 3:47 PM
No, that is called a complaint. If you win, you get a judgement.
It is then your problem collecting; the judge has nothing to do with it.
I have always gotten paid promptly, but my understanding is that you have to hire a professional to collect otherwise.
Here the limit is $3,000 in town courts and $5,000 in city courts; maybe $50 to file.
As always, VA might be different.

Gotcha. It's more than $5000. The guy that has done it said this prevented you from having to do all the collection related stuff, that's why he used it so easily. I don't know, but I will know shortly ;)

I've emailed the owner of the company this afternoon, explaining needed to be resolved and he needed to get it touch with me immediately to get it resolved. We'll see how far that gets.

paul cottingham
01-04-2015, 5:54 PM
Good luck to you!

We had a customer that owed us a buttload of money, and had no intention of paying. We made a final last-ditch effort by sending an employee who had been a bouncer in biker bars for years to talk to them (he was a very nice fellow, and a skilled network admin.) Voila! they paid us enough of the bill that we were happy. I still don't know what he said to them. As we had already given up on the money, we used the money to go on vacation.

Steve Rozmiarek
01-04-2015, 6:54 PM
Good luck to you!

We had a customer that owed us a buttload of money, and had no intention of paying. We mad a final last-ditch effort by sending an employee who had been a bouncer in biker bars for years to talk to them (he was a very nice fellow, and a skilled network admin.) Voila! they paid us enough of the bill that we were happy. I still don't know what he said to them. As we had already given up on the money, we used the money to go on vacation.

Lol! That's a good approach!

Wade Lippman
01-04-2015, 7:26 PM
Good luck to you!

We had a customer that owed us a buttload of money, and had no intention of paying. We made a final last-ditch effort by sending an employee who had been a bouncer in biker bars for years to talk to them (he was a very nice fellow, and a skilled network admin.) Voila! they paid us enough of the bill that we were happy. I still don't know what he said to them. As we had already given up on the money, we used the money to go on vacation.

35 years ago I took my car in for some warranty work and they, without asking me, replaced a tail light (or something, I don't remember what now...). They charged me $10 for it. I explained that I had already bought a bulb and was certainly not going to pay them $10 for a $0.25 bulb. The service manager called me into his office and had three mechanics with big wrenches stand behind me while he explained that I would pay for it or I wouldn't get the car back.
I suggested he call the sheriff or I would.
He took the bulb out! Hard to justify $9.75 for putting a bulb in, when it cost less than $0.25 to take it out.

Scott Shepherd
05-26-2015, 4:00 PM
I know this is bringing an old thread back to life, but just in case anyone else might be in a similar situation, I thought I'd post an update.

The process here is that you go to the clerk of the court and file a "Warrant in Debt" against the registered agent of the company. You can call the SEC and get that info (I think it was the SEC). Once that is filed, they give you a court date that's about 45 days out, which gives them up to 30 days to serve the warrant.

In our case, we thought for sure that once they got the warrant, they'd reach out and make some attempt to pay us. Nope. Not a peep.

Apparently there's really two outcomes. One is they show up in court and deny they owe it, at which point the judge will then set a trial date and you'll have to come back another day and go through that process, or two, they show up and admit they owe the money and the judge will award you a judgement.

That dings their credit pretty hard (I think our accountant told us 100-200 points off their credit score), and it stays on their record for a while. Our accountant said it's a really bad thing to have on your credit record.

At that point, it's up to you to pursue methods of getting paid. You can then start the process of wage garnishment or seizing property if the court allows, but those are all separate processes that take additional filings in court systems and you'll have to go through all of that.

In our case, we walked up to the bench, the Judge asked him "Do you owe them the money" and he said "Yes sir", and the Judge said "Judgement in your favor" and that was the end of it. Took about 15 seconds. I asked the Judge what do we do next, and he said "Work out a payment plan with him" and I said "Your Honor, if we could work out a payment plan with him, we wouldn't be standing here". He said "That's why I awarded you the Judgement, step outside and work it out, if he doesn't pay, come back to the court and we'll take the next step."

We went outside the court, told him what we'd take on a monthly basis, told him if he missed a single payment by a single day, we'd haul him back in court and start going after his assets.

To date, he's paid on the due date every single time. Funny how he didn't have money to make payments before, but he appears to now......

Plus, the court allows you to charge 6% interest on all money owed from the time of the Judgement, so we'll get a little extra cash from that, along with the cost to file the Warrant in Debt.

It was an interesting process. In some ways, I'm glad we went through it because now we have a lot better understanding of the system.

Chuck Wintle
05-26-2015, 4:08 PM
Gotcha. It's more than $5000. The guy that has done it said this prevented you from having to do all the collection related stuff, that's why he used it so easily. I don't know, but I will know shortly ;)

I've emailed the owner of the company this afternoon, explaining needed to be resolved and he needed to get it touch with me immediately to get it resolved. We'll see how far that gets.
Pursue the money with a judgement as has been mentioned assets can be sold and bank accounts garnished to pay you. let us know how it goes.

Mike Chance in Iowa
05-26-2015, 4:10 PM
Thanks for sharing the update Steve. I agree. That is definitely an interesting process and it's quite surprising in the way that guy has behaved. It's good to know you were able to recoup your costs with filing the warrant and even better, that you are finally receiving payment.

Brad Adams
05-26-2015, 6:06 PM
I'm glad your getting something Scott. It really sucks as a small business owner, that someone can stick us for five or even ten thousand dollars and get away with it. Yet someone can steal a $5 item from a store and get arrested. I've had good luck in the past getting the paperwork from the clerk of court, filling it out, and sending a copy of it to the deadbeat. I give them a three days to respond and set up payment arrangements or it will be filed. It works 90% of the time.

Scott Shepherd
05-26-2015, 6:27 PM
The part I don't get is that it's now screwed up his credit worse than what it already was, so if you're paying us now that the Judge told you do, if you would have just paid us the same thing, the same arrangements, we wouldn't have had to screw up your credit. Baffles me completely. When we left the courtroom, he said he was financially in trouble, that he owed a lot of people a lot of money. He wanted to setup a payment plan that would have taken him 19 months to pay us in full. That's 19 months plus the last 12 or so that it had been, meaning he wanted to pay us over almost 3 years. We told him it wasn't happening, he had 4 months to pay it off. He said there was no way possible, so we told him 7 months and if he didn't like it, we could walk to the clerk's office and start filling out the next round of paper work. He accepted.

He pleaded for more time. I said "We're not your bank, figure it out".

So far, so good, but that's always subject to change ;) I suspect it will. Nothing comes easy from him, so we're already bracing for him missing payments, but we hope that doesn't happen.

Myk Rian
05-26-2015, 9:30 PM
Be glad he didn't file for bankruptcy. You could have gotten nothing.

Rich Engelhardt
05-27-2015, 12:36 AM
Plus, the court allows you to charge 6% interest on all money owed from the time of the Judgement, so we'll get a little extra cash from that, along with the cost to file the Warrant in Debt.I believe you can collect on the interest (and any associated court costs) that are due up front and before applying any money towards the actual debt.
That really PO's the dead beat - - when they have to make several payments, only to find out after paying all that money they still owe you what they did in the first place :D :D.
I know - it's not very "nice" to enjoy that,,,,but,,,, doggone it, you deserve something for the misery they put you through! ;)

kevin nee
05-27-2015, 7:45 AM
I had someone owe me $25 thousand took two years with $400 to $500 payments couple tomes a month. I think the largest payment was $1500. After that I increased my rate 5% and gave a 5% discount if paid within 15 days. That worked worked pretty well until about 2009 when the economy was in rough shape. They were paying in 30 or 40 days and still taking the 5%. Closed the business in 2011. Now I do woodworking,fishing and my garden looks a lot better. I should have retired 40 years earlier! Good luck getting your money!

Scott Shepherd
05-27-2015, 8:14 AM
Be glad he didn't file for bankruptcy. You could have gotten nothing.

We saw that happen in a case before us. The people got up, the deadbeat was a no show, and they thought they had it in the bag. They read off the info, the Judge says "As of 8:21 this morning, they have filed for bankruptcy." The person said "Well, what about......." and the Judge said "Everything owed to you prior to 8:21 this morning is done. You can't get it."

Steve Schlumpf
05-27-2015, 9:18 AM
Scott - filing for bankruptcy is different than having it granted. While certain protections are given to the debtor once filed, the people can still seek a judgement but have to do it through the bankruptcy court. Depending on monies owned and type of debt, they may still be awarded something - as opposed to absolutely nothing.

Scott Shepherd
05-27-2015, 9:29 AM
Gotcha Steve, I think he may have been referring to "you can't get it" in reference to the case standing in front of him. They kept coming back at him, saying "What about ______", or "Yeah, but what about from this date.....". I think he point was it didn't matter from his perspective, the filing had taken place and that stopped him from issuing any judgements in their favor.

Phil Mueller
05-29-2015, 7:13 AM
I'm glad you were able to work it out with the customer after the judgement. I took a business to small claims and by default (the business never showed up for the court dates) I won. Great, I thought. Then I was told I needed to provide the means to collect. Took me about 3 months, but finally located someone who had paid them for some services and still had the cancelled check (with their bank account number on it). Filed that with the court and they withdrew it from his account. All in all about a 12 month process.

Jerome Stanek
05-29-2015, 7:31 AM
I'm glad you were able to work it out with the customer after the judgement. I took a business to small claims and by default (the business never showed up for the court dates) I won. Great, I thought. Then I was told I needed to provide the means to collect. Took me about 3 months, but finally located someone who had paid them for some services and still had the cancelled check (with their bank account number on it). Filed that with the court and they withdrew it from his account. All in all about a 12 month process.

I am glad that worked with the with draw. The court told my son that doing that is a one time shot. If there is not enough to cover it you could end up with just a small amount.