How to get paid?

December 8, 2007 12:17 PM

I have a friend that's a handyman (paints, small repairs, lawn care, etc) and is having trouble getting paid for some of the work that he's already done. Some of his customers owe upwards of $1000, but others owe smaller amounts. He has taken some of them to small claims court and won, but the court told him that they do not enforce the decision. What is the cheapest, easiest way for him to collect the money he is owed?
posted by GernBlandston to law & government (17 comments total)

He should ask for 1/2 payment upfront and the other 1/2 when the job is completed to protect himself. He could also draw up a contract which would at least provide some sort of proof that there was an agreement in the first place.
posted by pwally at 12:26 PM on December 8, 2007

[I am not a lawyer]
The standard thing to do in this situation is to hire a bailiff; the court clerk should be able to tell him how to go about doing that. There are other options too (like liens and stuff) but they can be difficult to put together if you don't have a lot of personal information about the debtor, like where they work or bank.
posted by phoenixy at 12:54 PM on December 8, 2007

Here in California you can enforce a judgement so that the debtor's property is sold by the sheriff in order to pay your friend. It's a hassle, but it's straightforward and the law is on your friend's side.
posted by rhizome at 1:12 PM on December 8, 2007

Your friend should either start collecting payment up front, or start threatening people. Not paying a bill of over $1000 is tantamount to (equivalent to?) grand theft. He has every right to collect payment from them by force, imho.
posted by tehloki at 1:16 PM on December 8, 2007

When you win a judgment in court, it's up to you to collect it. You can (sometimes) attach the debtor's property, if you can find it. For example, you may be able to put a lien on the debtor's house. From there, you can start foreclosure proceedings, which will make the debtor's mortgage (if any) come due, and generally make many people unhappy. Unhappy people are often more inclined to pony up what they owe you. You can also (sometimes) attach a bank account, which keeps the debtor from removing money from it. (Sometimes, if the bank fails to protect that money, the bank can be on the hook.) So if you can find enough bank accounts, you can prevent the debtor from paying his bills by check, and generally make his life unpleasant until he pays you. (The debtor's out in this case is to start using cash more, avoiding those bank accounts, and/or opening new accounts.) You may also be able to garnish the debtor's wages. Probably depends on state law, but you might be able to get advice (or at least pointers) from one of those free legal services.

Unfortunately, all of these things take time, and many of them take money (for various filing fees, hiring sheriffs, etc.) So...an easy way to get some money out of the judgment is to sell it to a collection company. They'll pay a discount rate depending on the kind of debt, how hard it is to collect, and the likelihood of getting stiffed. A court judgment is a pretty good debt (the collection company wouldn't have to sue first, since you've already done it). OTOH, they may not be very interested in the low volume of debts you'll produce, so they may lowball you because they don't want the hassle of dealing with a small number of accounts.

Still, pwally has the best solution: get at least some money up front. Everybody loses when the debtor welches.

(IAAL, but IANYL. TINLA.)
posted by spacewrench at 1:16 PM on December 8, 2007 [1 favorite]

While it's not directly related I'd definately add my vote for him having a contract and at least half up-front payment.

He should also build a penalty for late payments into his contract, because when people don't pay him on time he's going to start getting late fee's himself from his bank, electricity company, etc. Usually a % of the original fee, charged weekly on overdue accounts, does the trick.

In answer to your question I read about this service from MYOB a few months ago, it might be what he's after. The recommendation came from a woman who writes for a freelancer website.

"MYOB has negotiated a fantastic deal with Dunn & Bradstreet for small business owners called their Accounts Recovery Service.

This is how it works though the prices may have changed – for $400 you purchase from D&B 10 letters. For the outstanding bad debt, you send one letter ($400/10 = $40) and then D&B takes on the debt for you. They keep 10% of the debt and you get the remaining 90%.

You can get your MYOB Certified Consultant to include legally binding D&B terms and conditions in your invoice, demonstrating that you mean business and you intend to collect. Remember the prices may have changed but I am sure they are still reasonable. My clients have used the service and been ecstatic with it."

http://myob.com/servlet/Satellite?cid=1111637511898&attrname=Overview&pagename=MYOB%2FProduct%2FService&site=en_AU&c=Product
posted by katala at 1:17 PM on December 8, 2007

Would a collection agency help?
posted by GregX3 at 1:24 PM on December 8, 2007

Make them pay 1/2 up front, 1/2 upon completion.

Draw up a contract which builds in penalties for late payment. IANAL, but you might want the contract to explicitly mention your intent to place liens, attach bank accounts, etc. in the event of delinquency. Give this warning in a special section which can hardly be missed - I mean, don't go crazy with a fluorescent starbursts and wacky cartoon arrows, but if there's a separate paragraph with a bold heading, then your customers will have zero excuse. I don't know about you, but I'd be very careful to pay someone who says quite clearly that they could ruin my credit in the event of non-payment. The only time I've been late in paying other people has been when I felt I could get away with it.

I know nothing about how collection agencies work from the other side, but I'm sure that their services must be worth it to some degree if they exist. QED!
posted by Sticherbeast at 2:05 PM on December 8, 2007

I'd be very careful to pay someone who says quite clearly that they could ruin my credit in the event of non-payment.

I'd be very careful not to do business with them at all, if they start threatening me before things even begin. There's plenty of time to tell people you'll ruin their credit after you realize they're deadbeats.

And don't use force or start threatening people physically.
posted by grouse at 2:16 PM on December 8, 2007

I'd be very careful not to do business with them at all, if they start threatening me before things even begin. There's plenty of time to tell people you'll ruin their credit after you realize they're deadbeats.


Good point, but I'm not talking about "threatening" people. In my contracts, I state my willingness to hire a collection agency for delinquent payments, and I've never had a problem. It's buried in there and it's not meanly stated.
posted by Sticherbeast at 2:35 PM on December 8, 2007

I second the advice of calling a collections agency. I'm a freelancer, and the one time I had a dodgy client, the mere mention of a collections agency was enough to produce a check by fedex the next day.

Obviously it would be good form to give the client a reasonable margin beyond the due date, and to notify them that "if not paid within the next XX days, this bill will be submitted to a collections agency."
posted by adamrice at 2:39 PM on December 8, 2007

My dad's in the business of having to collect money from people who don't necessarily want to pay. Even with proper contracts and collections agencies- with with multi-million dollar companies and single persons alike- he has a bitch of a time getting money he and his company's owed. His usual method is he calls these people every single day and then some. Typically, they get tired of his harassing them and pay up. It doesn't always work, but usually. If they own their own business, the money owed can also be leveraged into free meals, services, or whatever they own.
The key, above all else, is to be bloody persistent. Do not give up and just continue to harass them (in a non-threatening way, of course).
posted by jmd82 at 3:54 PM on December 8, 2007

I won a small claims case in nyc - the defendant was uncooperative in providing payment, so I hired a city marshal. I gave a business and home address to the marshal, who within 3 weeks had seized assets at both and provided payment, less a small administrative fee. For a 10 minute phone call with the marshall, it was the least work out of the 3-month small-claims ordeal. Small claims is worth it if you can handle making one court date with a justifiable amount of paperwork/evidence. It was recommended to me that you should always sue for the maximum amount allowable in the off chance that the defendant does not show (which turned out to be true in my case).
posted by rye bread at 4:00 PM on December 8, 2007

Can he take out an ad in the local paper that lists the names of the deadbeats and warning other small businesses to avoid them? Maybe embarrassment will prompt some kind of payment.
posted by SuperSquirrel at 8:37 AM on December 9, 2007

SuperSquirrel's idea would probably just piss them off and make them even more reluctant to pay. Plus, depending on where you are, it could be considered defamation.
What about placing the money in some kind of trust before starting work? He gets the money when the person signs off that the work has been completed.
posted by indienial at 5:51 PM on December 9, 2007

Most vendors I've dealt with (in different industries) typically offered a 2-4% discount if the full invoice is paid within 15 days, full invoice owed if paid between 16-30 days, and then late fees begin accruing after 30 days.

If you've ever seen jargon on an invoice like "2% 10, net 30" that is what it's referring to. 2% discount if paid within 10 days, full invoice due by 30.

People may be more inclined to pay their dues when they see an opportunity to save themselves a few bucks. I know my invoices were always paid within days of receiving them.

As far as your friend is concerned, offering a 2 or 3% discount on a future $1000 job ($20-30) may not make him go hungry. But not collecting the $1000 at all probably will.
posted by Ziggy Zaga at 6:18 PM on December 9, 2007

Your question really has two meanings of the "[w]hat is the cheapest, easiest way for him to collect the money he is owed?" part:

What is the easiest, cheapest way for him to alter his business practices in the future to make sure that (for future clients and future situations) he gets the money he is owed?

He might consider finding a way to take credit cards (there are plenty of ways to do this for relatively little cost (a few percent per transaction, probably) either through services through places like CostCo or somewhere on the internet, maybe PayPal if your friend is savvy about the fraud issues). This will make collections someone else's responsibility as long as your friend gets a signed credit card slip. He should make sure that he has signed invoices, etc., and a written policy about how close his final charges will be to written estimates, etc. This avoids any issues about whether or not the work was authorized, etc.

If he has to work on invoice, provide discounts for early or prompt payment, get some of the money up front, etc., as others have mentioned. But working on an invoice basis against individuals is a fool's errand if you can avoid it, especially for a sole proprietor.

What is the easiest, cheapest thing for him to do now to collect on the judgments he already has?

A couple of people have mentioned enforcement by the sheriff's office or other public or quasi-public services. Lots of places will have things like this that will minimize the costs of collecting on a judgment. If not, he may have to try a workman's lien or something like that. Maybe trying to find a bank account and serving the right papers to the right place will get it done. It will depend on his jurisdiction. True debt collection tactics may be extreme if it is easy to find the assets to attach.
posted by iknowizbirfmark at 8:08 PM on December 9, 2007