Should I attempt legal action to get this invoice paid?
April 24, 2013 10:05 AM Subscribe
A collection agency in the UK is trying to collect an unpaid invoice for me. Their initial efforts have failed; should I authorize them to go ahead with legal action? (Details and earlier question inside.)
This is (regrettably) a follow-up to my earlier question regarding debt collection: http://ask.metafilter.com/237633/Help-with-debt-collection
I followed some of the advice there (thank you!) and sent a registered letter of demand to the company, but did not hear back, unsurprisingly. Once the date I mentioned in the letter passed I got in touch with another translator who said he had gotten payment from the same company but only after using a debt collection agency in the UK. I sent my unpaid invoice to the agency, and they began collection activities. (I think this just means calling and sounding serious and official at them.) So far I haven't paid them anything -- the deal was 5% of amount recovered, which was fine by me.
I got an email from the debt collection agency today saying that their initial efforts had not been successful, that the company director claimed he was unable to pay and was attempting to sell the business (good luck?!), and do I want them to move to the next step: legal proceedings? (Apparently they are doing so on behalf of another client with the same company already.)
I haven't written back yet, since this seems like the point at which I should consider whether it's worth getting in deeper or not.
According to the contract I was sent, the amount of the debt (a little under $9K) is more than the Small Claims limit in the UK, but I think that might have changed at the beginning of this month? In which case maybe it would be worthwhile to pursue. I'm afraid of actually having to go to court and racking up fees and still not getting any of the payment, but I also don't want to just let this amount of money go without putting up a fight. As far as I can tell the company is still contracting with translators and occasionally -- but mostly not -- paying them. There are also different fees depending on whether it is defended or undefended -- I have no idea whether the translation company is likely to send someone to court to dispute this or what.
So, should I move forward with legal action or is this a waste of time and money? Right now I'm composing a response to the guy at the collection agency to ask how likely it is that they'll be able to get any payment through legal action if the business is in fact failing, what category my debt would fall into, and exactly what legal steps they would take. Are there other questions I should ask to help decide whether to do this or to give up?
Man, I'd really just like to get paid for this work I did almost a year ago. Ugh.
This is (regrettably) a follow-up to my earlier question regarding debt collection: http://ask.metafilter.com/237633/Help-with-debt-collection
I followed some of the advice there (thank you!) and sent a registered letter of demand to the company, but did not hear back, unsurprisingly. Once the date I mentioned in the letter passed I got in touch with another translator who said he had gotten payment from the same company but only after using a debt collection agency in the UK. I sent my unpaid invoice to the agency, and they began collection activities. (I think this just means calling and sounding serious and official at them.) So far I haven't paid them anything -- the deal was 5% of amount recovered, which was fine by me.
I got an email from the debt collection agency today saying that their initial efforts had not been successful, that the company director claimed he was unable to pay and was attempting to sell the business (good luck?!), and do I want them to move to the next step: legal proceedings? (Apparently they are doing so on behalf of another client with the same company already.)
I haven't written back yet, since this seems like the point at which I should consider whether it's worth getting in deeper or not.
According to the contract I was sent, the amount of the debt (a little under $9K) is more than the Small Claims limit in the UK, but I think that might have changed at the beginning of this month? In which case maybe it would be worthwhile to pursue. I'm afraid of actually having to go to court and racking up fees and still not getting any of the payment, but I also don't want to just let this amount of money go without putting up a fight. As far as I can tell the company is still contracting with translators and occasionally -- but mostly not -- paying them. There are also different fees depending on whether it is defended or undefended -- I have no idea whether the translation company is likely to send someone to court to dispute this or what.
So, should I move forward with legal action or is this a waste of time and money? Right now I'm composing a response to the guy at the collection agency to ask how likely it is that they'll be able to get any payment through legal action if the business is in fact failing, what category my debt would fall into, and exactly what legal steps they would take. Are there other questions I should ask to help decide whether to do this or to give up?
Man, I'd really just like to get paid for this work I did almost a year ago. Ugh.
...I'm composing a response to the guy at the collection agency to ask how likely it is that they'll be able to get any payment through legal action if the business is in fact failing
They won't really be able to answer this in a way that will be emotionally satisfactory for you (and not saying that to diss emotions - on the contrary).
Your other questions seem fine!
I would be willing to bet money (granted, theoretical intarweb money) that the agency will pay as soon as legal action commences. But IANAL, only a translator who's seen this happen many many times. (And there are always exceptions... so I could well lose my bet. But still.)
posted by fraula at 10:22 AM on April 24, 2013
They won't really be able to answer this in a way that will be emotionally satisfactory for you (and not saying that to diss emotions - on the contrary).
Your other questions seem fine!
I would be willing to bet money (granted, theoretical intarweb money) that the agency will pay as soon as legal action commences. But IANAL, only a translator who's seen this happen many many times. (And there are always exceptions... so I could well lose my bet. But still.)
posted by fraula at 10:22 AM on April 24, 2013
but I also don't want to just let this amount of money go without putting up a fight
IAAL, IANYL, TINLA. I gave advice to you in the last question based upon my experience as a creditor's rights lawyer. My advice was, "I think attempts to collect the sum would be throwing good money after bad." My advice has not changed. I know you want to get paid your $9k but I do not think it is going to happen any more than my family business is going to get the +$2 million it was defrauded out of a few years ago. We recently stopped that legal action because we knew we would never see that money, so there was no sense in paying more legal fees. (it's going to a federal grand jury soon, but that won't get us or the other victims paid)
This is purely your business decision. I can tell you that in my experience a lot of people cheer about getting "my day in court" but very few are happy after they have their day in court. You can spend whatever money you want however you like, but I think this is bad debt you need to write off.
posted by Tanizaki at 10:23 AM on April 24, 2013
IAAL, IANYL, TINLA. I gave advice to you in the last question based upon my experience as a creditor's rights lawyer. My advice was, "I think attempts to collect the sum would be throwing good money after bad." My advice has not changed. I know you want to get paid your $9k but I do not think it is going to happen any more than my family business is going to get the +$2 million it was defrauded out of a few years ago. We recently stopped that legal action because we knew we would never see that money, so there was no sense in paying more legal fees. (it's going to a federal grand jury soon, but that won't get us or the other victims paid)
This is purely your business decision. I can tell you that in my experience a lot of people cheer about getting "my day in court" but very few are happy after they have their day in court. You can spend whatever money you want however you like, but I think this is bad debt you need to write off.
posted by Tanizaki at 10:23 AM on April 24, 2013
IANAL, TINLA, etc: One option may be to sell your right to collect. I know nothing about this business but anecdotal evidence suggests that it is growing. There are companies who will pay you some small amount (perhaps pennies on the dollar, but at least it's something).
I agree with Tanizaki above that expenses pursuing this kind of debt will quickly exceed the amount of money you're owed. That said, there may be other remedies that you're unaware of. I think it's worth talking to a lawyer, not just working through the collection agency. There may be statutory or common law remedies that would enable you to collect more than the amount of debt you're owed (punitive damages, for example).
Talk to a lawyer who works in your jurisdiction on this type of case. It may cost you up front but I think you'll value the certainty you'll receive in exchange.
posted by anewnadir at 10:40 AM on April 24, 2013
I agree with Tanizaki above that expenses pursuing this kind of debt will quickly exceed the amount of money you're owed. That said, there may be other remedies that you're unaware of. I think it's worth talking to a lawyer, not just working through the collection agency. There may be statutory or common law remedies that would enable you to collect more than the amount of debt you're owed (punitive damages, for example).
Talk to a lawyer who works in your jurisdiction on this type of case. It may cost you up front but I think you'll value the certainty you'll receive in exchange.
posted by anewnadir at 10:40 AM on April 24, 2013
Response by poster: The fees for legal action per their contract are...
For a claim that exceeds £5,000 but below £15,000 -- the fee is £300.00 (this is for Undefended -- and it's not listed as a Small Claims amount, but I think they just changed the maximum for that from £5K to £10K at the beginning of this month -- not sure if that affects their fee; probably not.)
And then the fees for defended claims (which is what I'm afraid of getting into) --
Order to Attend Court for Questioning - £125.00
Attachment of Earnings Order - £125.00
Third Party Debt Order - £175.00
Bankruptcy Proceedings - £450.00
Winding Up Proceedings - £450,00
Charging Order - £350.00
The fees shown above are separate from any disbursements required to be paid to issue the daim and enforce any judgment.
The collection agency also told me that the company does not have any county court judgments.
Tanizaki -- I definitely am not looking forward to "my day in court"! I would prefer very much for someone acting on my behalf to settle this without needing a day in court at all, but that's seeming increasingly unlikely. I am tempted to just let it go, but I figured I'd at least ask some questions first.
posted by little cow make small moo at 11:31 AM on April 24, 2013
For a claim that exceeds £5,000 but below £15,000 -- the fee is £300.00 (this is for Undefended -- and it's not listed as a Small Claims amount, but I think they just changed the maximum for that from £5K to £10K at the beginning of this month -- not sure if that affects their fee; probably not.)
And then the fees for defended claims (which is what I'm afraid of getting into) --
Order to Attend Court for Questioning - £125.00
Attachment of Earnings Order - £125.00
Third Party Debt Order - £175.00
Bankruptcy Proceedings - £450.00
Winding Up Proceedings - £450,00
Charging Order - £350.00
The fees shown above are separate from any disbursements required to be paid to issue the daim and enforce any judgment.
The collection agency also told me that the company does not have any county court judgments.
Tanizaki -- I definitely am not looking forward to "my day in court"! I would prefer very much for someone acting on my behalf to settle this without needing a day in court at all, but that's seeming increasingly unlikely. I am tempted to just let it go, but I figured I'd at least ask some questions first.
posted by little cow make small moo at 11:31 AM on April 24, 2013
The only thing I would add to Tanizaki's excellent input is that oftentimes American litigants need to be told:
This is a common mistake that people make when considering litigation: They make these decisions turn-by-turn while they chase their opponent. Generally speaking, people end up making better decisions if they begin with an accurate view of the whole playing field, not just the ten yards under imminent dispute. "Should I get in deeper?" is the right question but only after first asking, "How deep can this go?" Get a global view of your situation, and you'll be in a better position to assess.
posted by cribcage at 12:15 PM on April 24, 2013 [3 favorites]
If we move forward with legal action, our next step will cost time and money. And here's the thing to understand: Our next step is not actually to get your money. Our next step is to get a judgment, which will help to get your money. In other words, if we succeed then you'll be in a better position to get your money. But you still won't have it. Collecting it will be a subsequent step, and will cost more time and money.I'm not familiar with UK law and I haven't read your prior question, so this isn't even in the galaxy of being "legal advice." I'm not your lawyer. It's entirely possible that nothing in the preceding paragraph applies to your situation. But the general principle probably does, which is: Make sure you understand what you're wading into.
This is a common mistake that people make when considering litigation: They make these decisions turn-by-turn while they chase their opponent. Generally speaking, people end up making better decisions if they begin with an accurate view of the whole playing field, not just the ten yards under imminent dispute. "Should I get in deeper?" is the right question but only after first asking, "How deep can this go?" Get a global view of your situation, and you'll be in a better position to assess.
posted by cribcage at 12:15 PM on April 24, 2013 [3 favorites]
You can act on your own behalf in Small Claims court. You don't need to fork over all that dough.
You may be able to file on-line, and then fly over on el-cheap-o deal to plead your case. Irritatingly, you may only be allotted about 10 minutes. But you can get a judgement against the company on your own.
You'll get a trip to the UK, you'll get your day in court and with any luck, you'll get your money at some point in time. Winning your case doesn't guarantee payment.
So, I would not spend another dime of my own money on this.
I might file my own claim and see what happens. I might just write it off as an uncollected bad-debt on my income tax return and suck it up. I might order a bunch of pizzas to be sent to the house of the person who's screwing me. But I'm not putting forth any more dough to fool with this.
posted by Ruthless Bunny at 12:19 PM on April 24, 2013
You may be able to file on-line, and then fly over on el-cheap-o deal to plead your case. Irritatingly, you may only be allotted about 10 minutes. But you can get a judgement against the company on your own.
You'll get a trip to the UK, you'll get your day in court and with any luck, you'll get your money at some point in time. Winning your case doesn't guarantee payment.
So, I would not spend another dime of my own money on this.
I might file my own claim and see what happens. I might just write it off as an uncollected bad-debt on my income tax return and suck it up. I might order a bunch of pizzas to be sent to the house of the person who's screwing me. But I'm not putting forth any more dough to fool with this.
posted by Ruthless Bunny at 12:19 PM on April 24, 2013
According to the contract I was sent, the amount of the debt (a little under $9K) is more than the Small Claims limit in the UK
This now qualifies for the small claims track, as of April 1st, FYI.
(a) Increasing small claims track limit
Amendments are made to provide for an increase in the upper limit of the small claims track for civil claims (excluding personal injury and housing disrepair claims) from £5,000 to £10,000. A further amendment is made which removes the necessity for both parties to consent to a higher value case being allocated to the more suitable small claims track. Consequential amendments are made to Parts 16, 26, and 27. The change comes into force for all claims issued on or after 1 April 2013.
The company's costs do not look outrageous for that sort of field. But they will eat into anything you get back. Overall, if you go down that route and are successful, it looks like you'll be sacrificing a third of what you are owed.
When you last asked this question, I suggested you look into whether you could file online from abroad because it wasn't clear to me. If you can, it should be reasonably easy. If not, then it comes down to whether chasing this cash is worth plopping $3k down. Bankruptcy is not a simple thing here - but if the company is dodgy and got dodgy directors you'll be throwing good money after bad. Look on the resources I recommended before to see what other companies they are directors of.
posted by MuffinMan at 12:45 PM on April 24, 2013
This now qualifies for the small claims track, as of April 1st, FYI.
(a) Increasing small claims track limit
Amendments are made to provide for an increase in the upper limit of the small claims track for civil claims (excluding personal injury and housing disrepair claims) from £5,000 to £10,000. A further amendment is made which removes the necessity for both parties to consent to a higher value case being allocated to the more suitable small claims track. Consequential amendments are made to Parts 16, 26, and 27. The change comes into force for all claims issued on or after 1 April 2013.
The company's costs do not look outrageous for that sort of field. But they will eat into anything you get back. Overall, if you go down that route and are successful, it looks like you'll be sacrificing a third of what you are owed.
When you last asked this question, I suggested you look into whether you could file online from abroad because it wasn't clear to me. If you can, it should be reasonably easy. If not, then it comes down to whether chasing this cash is worth plopping $3k down. Bankruptcy is not a simple thing here - but if the company is dodgy and got dodgy directors you'll be throwing good money after bad. Look on the resources I recommended before to see what other companies they are directors of.
posted by MuffinMan at 12:45 PM on April 24, 2013
Response by poster: Yeah, my first impulse upon receiving the email this morning was "oh, screw this, I don't want to get in any deeper." So I am definitely leaning that way.
I did look into filing in Small Claims court, but apparently I can't file online without an address in the UK. Not sure if this is just for the online thing (MCOL) or if I can't file at all from the US. But even if I did manage to file a claim, if I had to show up in court in the UK that wouldn't be a very cost-effective choice, either.
posted by little cow make small moo at 1:24 PM on April 24, 2013
I did look into filing in Small Claims court, but apparently I can't file online without an address in the UK. Not sure if this is just for the online thing (MCOL) or if I can't file at all from the US. But even if I did manage to file a claim, if I had to show up in court in the UK that wouldn't be a very cost-effective choice, either.
posted by little cow make small moo at 1:24 PM on April 24, 2013
You may well not have to go as far as putting the company into bankruptcy. *If* the management of the company are looking to survive then they will not want a county court judgement registered against the company: that will show up whenever anyone checks the credit rating for the company in question.
Up to this point, nothing you've done so far has threatened this company's ability to raise capital elsewhere. A judgement in court against them will be public & will be visible to anyone checking their credit rating so the threat of obtaining one has a decent chance of extracting a settlement out of them.
As fraula says: the credible threat of actual legal action has a strong chance of extracting payment out of them, especially if the company still appears to be trading, but there are no guarantees.
posted by pharm at 5:48 AM on April 25, 2013
Up to this point, nothing you've done so far has threatened this company's ability to raise capital elsewhere. A judgement in court against them will be public & will be visible to anyone checking their credit rating so the threat of obtaining one has a decent chance of extracting a settlement out of them.
As fraula says: the credible threat of actual legal action has a strong chance of extracting payment out of them, especially if the company still appears to be trading, but there are no guarantees.
posted by pharm at 5:48 AM on April 25, 2013
Response by poster: Here are some snippets from their response this morning:
There are currently no CCJ's registered against the company however this is soon to change as we have already issued legal action against [company] for another client.
[Owner Guy] has indicated that the company is in severe financial difficulties and they have no money. He stated that he is trying to sell the business but the likelihood of this would seem pretty remote especially if adverse information is registered against the company.
I'd like to think that they'd cough up money if I just made noise about filing with small claims court, but if they really don't have the money, it would be pointless to pursue it. Right now I'm waiting to find out if I can file myself from abroad, but I suspect the answer is no.
posted by little cow make small moo at 9:28 AM on April 25, 2013
There are currently no CCJ's registered against the company however this is soon to change as we have already issued legal action against [company] for another client.
[Owner Guy] has indicated that the company is in severe financial difficulties and they have no money. He stated that he is trying to sell the business but the likelihood of this would seem pretty remote especially if adverse information is registered against the company.
I'd like to think that they'd cough up money if I just made noise about filing with small claims court, but if they really don't have the money, it would be pointless to pursue it. Right now I'm waiting to find out if I can file myself from abroad, but I suspect the answer is no.
posted by little cow make small moo at 9:28 AM on April 25, 2013
There are currently no CCJ's registered against the company however this is soon to change as we have already issued legal action against [company] for another client.
I am sorry to reply again, but this seals it for me. It looks like there will be judgment creditors in line ahead of you. If judgments in the UK work anything like in the US, they will have priority over you when it comes to collecting on the judgment.
posted by Tanizaki at 11:35 AM on April 25, 2013
I am sorry to reply again, but this seals it for me. It looks like there will be judgment creditors in line ahead of you. If judgments in the UK work anything like in the US, they will have priority over you when it comes to collecting on the judgment.
posted by Tanizaki at 11:35 AM on April 25, 2013
"If judgments in the UK work anything like in the US, they will have priority over you when it comes to collecting on the judgment."
Just having a CCJ in place doesn't give you any priority in bankruptcy proceedings.
fwiw, the order of priority in a UK bankruptcy goes insolvency fees > secured creditors (those who have a charge over some company asset) > preferential creditors (employee wages mostly) > creditors with a floating charge on company assets (eg bank overdrafts) > unsecured creditors > shareholders.
You don't (legally) get to put yourself ahead of the list by suing first.
Now, the OP is no-where near at the top of the list of creditors, being an ordinary unsecured creditor, so it all depends on the state of the company how much she would get paid if the company was wound up. Personally, I'd regard spending £300 for a potential £9000 return as being worth the risk, as you get to find out fairly shortly whether the company is regarded as a going concern by the mangement or not.
(Is it possible to combine your claim with the other court case by the way? Might be worth asking the claim firm.)
posted by pharm at 2:44 AM on April 26, 2013
Just having a CCJ in place doesn't give you any priority in bankruptcy proceedings.
fwiw, the order of priority in a UK bankruptcy goes insolvency fees > secured creditors (those who have a charge over some company asset) > preferential creditors (employee wages mostly) > creditors with a floating charge on company assets (eg bank overdrafts) > unsecured creditors > shareholders.
You don't (legally) get to put yourself ahead of the list by suing first.
Now, the OP is no-where near at the top of the list of creditors, being an ordinary unsecured creditor, so it all depends on the state of the company how much she would get paid if the company was wound up. Personally, I'd regard spending £300 for a potential £9000 return as being worth the risk, as you get to find out fairly shortly whether the company is regarded as a going concern by the mangement or not.
(Is it possible to combine your claim with the other court case by the way? Might be worth asking the claim firm.)
posted by pharm at 2:44 AM on April 26, 2013
Just having a CCJ in place doesn't give you any priority in bankruptcy proceedings.
Same in the US. A civil judgment holder is also going to be a general unsecured creditor.
I did not have bankruptcy in mind when I commented about priority. Assuming bankruptcy was not filed, I presumed that the rule of senior liens having precedence over junior liens was also the rule in the UK. While a creditor who files before another isn't necessarily going to have his judgment entered first, I think that is more likely than not going to be the case here.
posted by Tanizaki at 8:37 AM on April 26, 2013
Same in the US. A civil judgment holder is also going to be a general unsecured creditor.
I did not have bankruptcy in mind when I commented about priority. Assuming bankruptcy was not filed, I presumed that the rule of senior liens having precedence over junior liens was also the rule in the UK. While a creditor who files before another isn't necessarily going to have his judgment entered first, I think that is more likely than not going to be the case here.
posted by Tanizaki at 8:37 AM on April 26, 2013
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posted by alms at 10:19 AM on April 24, 2013 [1 favorite]