When is it worth it to pursue a client for money they owe you?
In this legal post (found by clicking here), I discussed the practical steps to take if a client or your own designer/ florist/planner breaches their contract with you. Today, I'm talking about what to do if taking serious legal action is not an option for you.
Pursuing any of the following options will depend heavily on your personal situation. It depends on what feels right to you, and whether you think you will recoup the costs owed to you under your agreement. For example, if someone burned you for $200, it may not be worth your time and effort to get an attorney involved, but you might send them a letter yourself (more on that in #1, below.)
However, if a bride stood you up at her own wedding, she may owe you not just your final deposit... she may also owe your for your loss of time, such as a different wedding you could have done that day but for your agreement to work with her exclusively; plus lost profit from the other things affected by her at-the-altar cancellation, such as the lost profit you expected to generate from the blog post about her wedding. Now we're looking at something like $6000+. These situations are highly fact-dependent, which is why if you are thinking about taking legal action it's a good idea to consult with a licensed attorney in your state.
You have a few options if there's not a good chance you'll recover the money you have to spend on a whole drawn-out legal thing. You can:
Draft your own demand for payment letter.
Whether you choose to send your own demand letter or have an attorney send a demand letter is a personal financial decision. Most attorneys are paid at an hourly rate rather than flat fee (I do not do hourly rates.) When you hire an attorney at an hourly rate, they will bill you for the total hours it takes to research your issue and draft your demand letter, as well the time it takes for any phone calls and email drafting.
You can save yourself some money by diligently working on a demand letter by yourself and having an attorney sign and send it on your behalf. If you don't feel like working on a demand letter, you can purchase one from our shop and fill in the blanks.
Hire a certified collection agency.
If your demand letter doesn't let the breaching person know you're serious about getting paid, it may be time to call in the big guns. You can look up some certified collection agencies through the Better Business Bureau. Some will pay you a percentage of the debt collected and others will allow you to sell them the debt and pay you a chunk of cash to go on your merry way.
The best medicine is prevention.
Ahh, don't shoot me. But if you weren't burned too bad, let it be a mistake you learn from, not one you repeat. Take comfort in the fact that this will probably never happen again, which is a big deal considering your prices are only going up from here as your product or service generates demand, and if it happened in five years you would have lost a lot more!