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Collecting a Judgement?
rk2z asks: "I did some independent contractor work about 6 months ago. I delivered the software as specified in my contract and turned in the hours that it took. I then sent the company an invoice for $1400 which was based upon my contracted hourly work rate. They had paid me in the past so I didnâ(TM)t do anything like withhold source code until payment. To make a long story short, they refused to pay me and I ended up taking them to Small Claims court in the state of Nebraska. I won a judgment for the above amount. The problem is, Iâ(TM)m not really sure how to go about collecting my judgment. The amount is relatively small so I donâ(TM)t want to consult a lawyer, because it not really worth blowing the entire judgment before I even get it. But it's big enough that I donâ(TM)t want to give up on it."
"I looked a couple of law websites like here and
here, but their suggestion were fairly broad.
Does anyone have any experience in going after debtors (without a lawyer if possible)? Is it better to go to a collection agency and blow half the settlement up front? If so does any one know a good collection agency?
Things to keep in mind: [the customer] is a small company (less than 7 employees). They have some property like computers and such, but how do I find out what they own vs. what is leased. Owned property can be seized by the Sheriff and sold at auction. I have tried to contact them about a monthly/weekly payment plan, but have been blown off every time I try to make some progress on the issue. Thanks in advance."
If they haven't paid you then they haven't fulfilled their side of the contract, and they don't own (or otherwise have rights to) the code you wrote. If they're selling/distributing the code that could be a big problem for them as that would be a violation of your copyright, and damages for that are up to $150k per violation. Wouldn't they feel stupid for not paying you that $1400?
I think I would just talk to the Sheriff, though. I very much doubt that you have to know ahead of time what equipment they own or lease. That's the sort of thing that can be sorted out after it's seized.
You might also want to contact a credit reporting agency to see how you can put a black mark on their credit report.
Under capitalism man exploits man. Under communism it's the other way around.
My mother went through this to collect back rent from a tennant:
After securing a judgement, ensure that they're are notified of the judgement and given a small window of time to pay. After that, engage the services of the county sheriff where they are located. Sheriff's have the authority to seize property to settle small claims judgements.
Some people have a way with words, and some people, um, thingy.
Contact a collection service. They take a % of the total (often seems like a large %) -- but remember... getting 80% of 1400 is better than getting 0%, and without professional help that is what you will probably get.
The collection agency has tools to make life hard for those holding out on you (even before you go to court, with the solidity of a court decision, you should be in an even stronger position).
Call today -- and forget about it -- just wait for the check. They specialize in this -- and want their % -- they will get the job done, they deal with hundreds of companies like this everyday.
I know you don't want a lawyer, but face it: lawyers are paid for things like this because they know more ins and outs than you'll ever know.
For example: You want to attach or seize property. Didn't it occur to you to seize their bank account? (I learned this from a lawyer friend.) They've paid you before. Do you remember their bank? You could actually have the funds in their bank account seized. Then you wouldn't have to worry about equipment and selling it to recoup fees.
Another point: In many situations like this, if you hire a lawyer to attach, seize, or garnish their account, THEY can be held responsible for legal fees. Think of it: They don't pay, you sue, they ignore it, you hire a lawyer, the lawyer seizes not only your fee (plus, in VA, you can get upto 9% interest per year), but the lawyer's fee is also seized and deducted from their account.
If this works in your state, then you walk away with your fee and free legal service. They pay your fee and the legal fees for the lawyer that you hired!
Threaten to mention their website on Slashdot. I'm sure a lot of us would be happy to click the link a few times.
"Derp de derp."
Read this part very carefully: This is NOT legal advice. I am NOT a lawyer, much less a lawyer licensed to practice in your jurisdiction.
Furthermore, I have no idea what Nebraska law is like. So there will be things that are different than how I've described them here. Possibly there are additional steps you need to take, or additional things you need to do.
So don't rely on this.
Here we go:
You have a judgment. You need to execute that judgment. Because right now the judgment alone is just a pretty piece of paper. All you are right now is an unsecured creditor. Little more than scum, in the greater scheme of things, no offense. You need to act to raise your status!
Go to the courthouse, find the clerk of courts, and get a writ of execution (aka a writ fi. fa., or writ of attachment).
The writ is an order by the court to the Sheriff ordering him to go find property owned by the debtor that is not exempt from execution (such as the clothes on their backs, were the debtors individuals), take it, sell it at auction, keep enough money to handle their own costs, give you however much is left until you have all you were owed, and then the surplus goes back to the debtor.
Basically, once you've gotten the writ and the sheriff has recieved it, he'll go out there one day in a pickup truck and start taking stuff. Find out when he's going, and go along, so that you can pick out good stuff that is sure to sell at auction for enough money. But make sure that you don't pick out things that are exempt by law; you may need to do some research on Nebraska law to figure this out.
BE AWARE that sheriff's auctions hardly ever get the full value of whatever's being sold. You may want to find something that you PERSONALLY want, have it seized, then buy it at auction, likely for whatever price you were owed. Then use it, or sell it yourself, or whatever.
Note that some property is difficult to load in a pickup truck -- land, for example. Don't worry if the sheriff merely declares that he has executed on it, and maybe tapes on a piece of paper to that effect. It's legal, and the debtor will get in serious trouble if he fucks with that property (selling it or damaging it), including, e.g. contempt of court.
HOWEVER, if the sheriff can't find anything, he will report back to the court (on a document called a return that lists whatever he finds) 'nulla bona.' (at least if he has any respect for tradition)
Anyhow, once the sheriff got something, you are now a judicial lien creditor BUT IN THAT PROPERTY ONLY. Otherwise your status is unchanged.
PLUS there are even more fun things you can do.
Instead of bothering with the writ fi. fa., you may be able to take advantage of your state's turnover statute. This dispenses with the sheriff and is a court order directing the debtor to just give you property in his control, even if not in his posession. And since you can use discovery rules in this process, you can make him tell you, under oath, with penalties for perjury applicable, as to what it is he's got.
If there is real estate in the county, you might be able to have your lien recorded in the county courthouse. This might also be called abstraction. It places a lien on the real property in the county (NOT personal property; that is, land, not pick-up-able stuff). This prevents him from selling it, since anyone who bought it later, until you're paid off, would basically wind up having to pay.
Or if negotiations haven't entirely broken down, you could offer to trade your judgment for a security interest in some specific property (you will be much more likely to want a lawyer for this, as all the p's and q's HAVE to be minded) which basically means you'd have a much stronger claim.
Since, if the debtor goes into bankruptcy, you're in serious trouble. You DON'T want that to happen. It will totally fuck you up.
Additionally, ACT FAST. There is a sort of pecking order. Firstly, sold property pays court/sheriff's expenses.
-- This and all my posts are in the public domain. I am a lawyer. I am not your lawyer, and this is not legal advice.
IANAL
I have gone through small claims court in Arizona. I have won twice. The difficulty is in the collecting. In the first case, no problem. The second case I am still trying to collect on. Fortunately I have the bank account information and in Arizona, I am able to garnish the bank account (except for a certain ammount) for what is owed. It took hiring a private investigator to find out what happened with the case (county recorder's office lost the paperwork -- keep your own copies of everything!!!) Now, I'm back to using the Court Constable for the serving the garnishment.
Try contacting the Nebraska State Bar for information on small claims court for non lawyers. There should also be somewhere an agency for pro bono work for lawyers. In Arizona, it's Community Legal Services - they have a document that explains in plain English what it takes to go through small claims court and how to obtain your judgement (if awarded).
Good Luck!
design is art - art is design
Here in the UK a friend was owed money by an agency for some contract programming he had done for them and they wouldn't pay his final invoice. Not couldn't, just wouldn't. As he routinely refers to agents as 'parasites' or 'scum' when in a good mood, he didn't want to mess around and play nice. AFAICR he checked out his legal status first (saw a lawyer about his contract) and then contacted the company threatening them with a winding up order if they didn't pay. This would basically do what it says and end the existence of the agency as an entity - instant extinction, no business able to be transacted etc. - basically a 'nuke the bastards' option, perhaps a trifle extreme but he really doesn't like agents.
Apparently they laughed at him, but when they shared the joke with their legal staff full payment was made immediately.
He can be a little over the top, and he would probably have been happy to take the loss so long as the other guys came off a lot worse, I think he was disappointed that they coughed up.
Did I mention that he doesn't like agents?
I don't know if you have such a mechanism in your state, but if you do a (real) threat to terminate the company is a much bigger stick than garnishing the account - it may be empty, they may just change banks etc. It could be fun to check if you have the ability to do this.
I hereby inform you that I have NOT been required to provide any decryption keys.
Once the judgment becomes final and non-appealable, you get the clerk of the court to issue you a Writ of Execution on the judgment, then take that to the Constable for the precinct in which the company's offices are located. The Writ will cost you about $15 and the Constable's service fee will probably be somewhere around $50.00. The Constable will serve the writ and either bring back cash or seized property, which will then be sold at auction and you get your money from the Constable.
That's all there is to it.
BTW. IAAL
utter rubbish
IANAL! And you probably need one. But I will say first that I found the post from cpt kangarooski to be quite good. A few comments:
But make sure that you don't pick out things that are exempt by law; you may need to do some research on Nebraska law to figure this out.
In Colorado you can basically take it all, and they have 10 days to file with the court to recover exempt equipment. Also in CO "essential" equipment can be exempt. IOW, they have 10 computers, the sheriff takes them all, the court will give them back the 1 with their QuickBooks file. Also make sure you know how much the stuff goes for on eBay, both so that you know how much to take and so you can show up at the sheriff's auction and bid up to that amount, if needed in order to prevent a bargain hunter from buying it all for $10. Be prepared for them to throw a fit, stand your ground, and don't wind up taking only enough stuff to cover 1/4 of the debt (ahem, speaking from experience here). Don't count on this of course, but the sheriff's department told my attorney that it's not uncommon for a company to send someone to the bank, accompanied by the deputy, to get a cashier's check rather than have their property seized.
It's harsh, and it's cruel, and I think personally I would struggle with the morality of it
WTF??? Companies know how much money they have in the bank, how much coming in, and what their expenses are. They knew they didn't have the money to pay this guy and let him keep working because they wanted, in effect, to steal his work. Yes, they were probably hoping that enough new sales would close that they'd be able to pay their bills, but they had to know there was a chance they'd wind up screwing him. Now on what plane of reality is there any possibility of a moral issue with collecting the debt?
I don't know if you have such a mechanism in your state, but if you do a (real) threat to terminate the company is a much bigger stick than garnishing the account - it may be empty, they may just change banks etc.
Yeah, I'm involved in a long-running attempt to collect from a company that has gone to great lengths to avoid paying their debts (transfer of assets to a sister company in another country, leaving the original US company defunct with all the debts, and forming a new US company with the same executives and employees to continue the development work on behalf of the foreign company). There's no direct way to shut them down, but soon enough they'll find themselves on the receiving end of an action that will force them to pay or guarantee that they'll never be able to sell their product in the US nor get another dollar from investors. The most ridiculous thing is that I've told them exactly what I'm doing, and they're just ignoring me. I guess they think I'm bluffing...
I recall reading some years ago, that a guy in San Francisco was owed money by the local telco (at the time Pac Bell). He won in small claims court, but Pac Bell still ignored him. To make a long story short, the sheriff filed the paper work to sell one of Pac Bell's downtown buildings in order to collect the money. No one else showed, so the the guy ending up buying it for $1. At that point, he got Pac Bell's attention. He ended up selling them back their building for the amount owed plus court costs.
[Insert pithy quote here]