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Collecting from deadbeats

SRT Mike

Stainless
Joined
Feb 20, 2007
Location
Boston MA
So what is the conventional wisdom on this?

I have a customer who owes me some dough - not much, just around a grand... but enough that it pisses me off that he's dodging me.

It's coming up on a YEAR now. For months he would tell me he's having a hard time and will pay soon. Then I stopped hearing from him. Although he has a website where he was reselling my parts, and I notice he updates his "news" section every few weeks with sales and specials, so he's still actively in business.

I know the guy owns his own home, and I don't think his business is even actually registered with the state, which makes me think that he would be held personally liable for the bills.

I don't think a collection agency just calling him is going to get the job done... on the other hand, I don't think a collector will sue over $1k... and I don't really need the hassle of dealing with this.

Guy is in Columbus, OH. Anyone got any suggestions on what has worked for them to collect $$?

The other thing is that he would just email me the orders, so I don't have signed orders from him, just copies of emails saying "send me X" and a train of emails where he admits to owing me $$ and keeps saying he will pay.
 
well,if it was me,i'd go over to the redneck car sites i belong to and ask a member to go do a little business with the guy.i'd even pay someone to do it,its not about the money,its the principle of the thing.a Man pays his bills.
one of the local snap on dealers went to the debtor's house and stuck the past due bill to the gentleman's front door-with one of them free screwdrivers as a tack.
 
I hope you get what's due,

Seen it in my years working in the office at a wood business. A couple of times with guys like this. Actually, it helped bring down one of the last places I worked when it was bad.

Lawyers now I think at this point.

Not worth it for the amount, I guess.:(

walt
 
I am owed $700 right now... Not a ton, but quite a bit for a college kid. That's a lot of beer... I mean books :D

I have no good tips, I've lost plenty of money from deadbeats. I'm way too nice for my own good.
 
It would seem that since you have emails for the orders you have a case in small claims court. I had an accident where I went round and round in a G&L VTL that didnt have any safetys from the cnc retrofit and I had sent them an email stating my concern about the safety issue. The email held up in court so I dont see why yours wouldnt. Have one of these cheap online attorneys that get $35 to draw up a notice and send it to him. I wouldnt spend too much on it.
 
one of the best tools is persistance..... call once a week,,,,,,remind him of the bill. Invoice finance charges.... you make parts for a living, not loans. The best situation would be haiving a signed customer agreement where cuustomer agrees to pay xx.xx daily percentage rate interest on overdue invoices and waives the statute of limitations in lieu of a 10 year collection window. However, for small claims the small claims court is your best avenue. The downside to small claims is that it has to happen in the customer's county of residence. if they are across the countyr you have to go to them, it can cost as much to collect it or more for the travel and bs involved.
I have collected on occasion and been burned for larger amounts than a grand... best bet is to not deal with that kind of people once you find out thats what they are. Everyone can get a little down on their cash occasionally but a year.... thats a long trough in cashflow.
 
I doubt conventional methods will work. A collection agency will take it on and I have used one before to collect from a debt beat company. They will probably charge 35% or so for that amount and the debt being a year old. If they don't succeed you owe them nothing. Picking a collection agency in the debtor's home town is best. I collected on a two year old debt and had to pay 25% of the $5,000 that was owed. They only asked me for invoice copies and shipping information from UPS.
Another idea, if he is still selling your items you could threaten him with an internet smear campaign. Tell him you will register yourself as acmewidgetssucks.com (his name +something negative) and let the world know he is selling items he did not pay for. Anyone googling his business name will find you also. I made a similar threat to someone and got them to pay up a few $1,000 a few years back, I never had to run the smear campaign. Whatever you do, don't give up and good luck getting that $1,000 you are owed.
 
I was going to say exactly what DualKit said. Since you said he is selling these on the internet, you can just build a website with almost the exact same name and say he is a dead beat.

If you need help with the site, I can slap a cheesy one together for you.
 
I was going to say exactly what DualKit said. Since you said he is selling these on the internet, you can just build a website with almost the exact same name and say he is a dead beat.

If you need help with the site, I can slap a cheesy one together for you.

Problem with that is that it's just as easy for him to retaliate against me the same way... and my business is a lot bigger and more stable, so I have a lot more to lose.

I was wondering if it's illegal to create a letter from a lawyer if it's not really from a lawyer? Collection agencies do this all the time, AFAIK... they make a letter that says something like "From the Law Offices of Bob Smith", then write a bunch of threatening stuff.

If it's not illegal to do that, then I could FedEx him a letter from a "law office" demanding payment by X date for the initial $1000, "or we have been given authorization to sue you for the maximum possible allowed under law". Then if I don't hear from him, I would try to file a small claims suit for the maximum possible amount (the amount he owes + all legally allowed fees, interest, etc). I did a little checking and I know he owns his home, so I could put that in my "law office letter" so he would realize that someone has done their homework and hopefully would not dismiss it as just a toothless BS thing. And if a Sheriff or process server comes to his home to serve papers on him, then hopefully that would motivate him to pay off the amount owed.


Any input on whether the above is legal?
 
Get two of your biggest toughest employees and pay him a vist. As soon as y'all arrive take the upper hand in conversation, your two associates standing behind arms crossed, sunglasses in place. If he starts baulking have signal pre-arranged signal so your 2 helpers will know when to move in closer. I am by no means suggesting anything physical, just old fashion bluff.
I have done this 3 times and collected twice right on the spot. I dunno maybe there was a reason they placed me on the short bus, it worked... be very assertive, establish and keep eye contact maintain & be calm no raised voice no matter what.
There are other ways too but I think they are best not brought up.
 
Although, if you do it carefully and in the right way, its probably not illegal to produce a letter that looks as if its from a lawyer I'd be chary of upsetting the lawyers union. Especially if you think you may desire to take stronger action in future. That sort of thing could be made to look like trying to obtain money by deception which isn't going to help your case. Even though its your money in the first place.

Odds are he will just ignore it anyway. These guys have a very good idea of just how far people trying to collect without sending good money after bad are willing to go. He knows that real legal action isn't worth it to you. Don't forget that you have to "pay" the time spent and work lost as well as the direct costs. No way are you getting that back.

If you can get a collection agency for 25% of the money to be recovered, unless you have nothing more productive to do, best answer in these situations is to spend as little time as possible yourself on the collection efforts. Bottom line is how many hours does $250 represent. Easy to spend more time than that getting nowhere trying inexpensive methods so you've lost that much anyway even if he does cough it all up.

As you originally dealt by E-Mail I figure 2 "where is my money" E-Mails in demi-polite mode after the first reminder that the bill is overdue followed by 2 letters recognising his cash-flow problems and requesting a mutually agreeable payment schedule. Include a date on which the collection agency will take over if you don't get a reply with a satisfactory schedule. If you had these things boiler plated up its no great time to personalise and send. Having something like that as company policy sure takes out the sympathy factor which always gets in the way when dealing with individuals. The guy is a thief.

Clive

PS This is advice from the Do As I Say Not Do As I Do book. I figure that I'm around £50,000 - £60,000 down over the years due to playing Mr Nice Guy.
 
If you have a friend in Columbus, ask him to help you file the small court claim, making sure that you request any penalty which is allowed (you may be allowed interest or to increase the claim if there are other outstanding judgements). Find out if you need to appear in court or if you can have a representative appear for you. If you need to appear, decide whether it is really worth the time and aggravation.

If he does this on the side, call him at work asking to speak with him and let whomever answers the phone know that you are calling about a debt he owes you. If he is married, call his wife, ask for him and let her know that he owes you money. In every call, be polite, factual and to the point. Don't exaggerate or disparage the person, just let whomever you are talking to know that you are trying to collect a debt and that the person you are trying to reach is making it very difficult. Embarrassment and shame are powerful tools, find a way to use them. I had to collect a little over $1,000 from a former customer a few years ago and what ended up working was persistance. I wasn't going to let him walk away and eventually he realized that unlike other people he had stiffed, I wasn't going away and I wasn't going to step over the line and do anything that wasn't proper. The small claims judgement put it in writing and my calls to him at home and work made it clear that I intended to collect. He ended up making payments of $20-40 a week until he had paid the debt and penalty from the small claims judgement

Whatever you do, make sure you stay within the law. You do not want to give him any legitimate reason to claim harrassment and you need to be able to sleep at night. Finally decide whether this is about money or principle. If it is principle, do whatever it takes and spend a few bucks, if it is money, you'll probably have to write it off, which is probably what he is counting on.
 
Problem with that is that it's just as easy for him to retaliate against me the same way... and my business is a lot bigger and more stable, so I have a lot more to lose.

I was wondering if it's illegal to create a letter from a lawyer if it's not really from a lawyer? Collection agencies do this all the time, AFAIK... they make a letter that says something like "From the Law Offices of Bob Smith", then write a bunch of threatening stuff.
I'm not a lawyer, but seriously, you should talk to an actual lawyer before taking any advice here. You're opening yourself up for a world of trouble.

For instance, in Canada and I believe in all of the US states it's illegal to impersonate a lawyer, as it's practicing law without a license (you don't need to be in a court room to practice law).

Because you're also using the mail to send a letter under false pretences to collect money it may be considered mail fraud as well.

You'd also be breaking the Fair Debt Collections Practices Act, specifically by "Misrepresentation or deceit: misrepresenting the debt or using deception to collect the debt, including a debt collector's misrepresentation that he or she is an attorney or law enforcement officer".

You can't contact the guy at his place of employment if he asks you not to. And even if he doesn't you can't do things like tell the person you are speaking with that you're calling about a debt.

Following the suggestion to create a website outlining the debtor's debts is also against that act.

And so is "Threatening arrest or legal action that is either not permitted or not actually contemplated, abusive or profane language, contact by embarrassing media," etc.

Obviously any threat of physical violence would be grounds for action, and I'd imagine driving a screwdriver through the door would be sufficient grounds for any competent lawyer.

The fact is, the guy may be scared shitless and drop the money in your lap, never bothering you again. But if he's got half a brain and is as selfish as he seems he may see dollar signs when you take any of this action, and he may decide to pay a lawyer and come after YOUR money. Especially if he's a long-term deadbeat - they almost always know all the ins-and-outs of the law, and how to play it to their advantage.

Then there's the whackjob-factor. What happens if this guy takes the threats seriously and comes looking to make a pre-emptive strike? That happened a couple years ago at a (Texan, I believe) collection agency that was known for their aggressive tactics. The guy shows up with a gun and blows the collection agent's head off.

Law isn't a simple, straight-forward thing. Even if something seems morally right that's in no way indicative that it's legally sound. The guy's already shown that he's not interested in doing things "man-to-man", so you can bet that if he can figure out that he can use the law to his advantage he will. Of all the suggestions here I think small claims court is probably your cheapest and safest bet. But I'd still suggest contacting a lawyer. You've got a hell of a lot more to lose than him.
 
Hmmm .... Something brought up here cought my attention...

I am ready to turn some wolves loose as well. While not gunna find someone in the same town, I am thinking that maybe find a collection agency in the same state may be of more use?


-------------

Think Snow Eh!
Ox
 
I've done alot of net 30 over the decades (used to manufacture tapping machines and sold thru reps, dealers and direct). Also have had disputes with everyone from forklift sellers to eBay sellers over goods not as promised over the years. Never spent a penny on a lawyer or small claims court. What worked for me every time was to be relentless in contacting them (as long as I didn't waste much of my time doing so) and finding out who their relatives were (wife or parents) and threatening to contact the relatives about it if I had to, threatening to call them at 2AM if I had to, just whatever it would take. Maybe I was just lucky but it always worked.

(FWIW, dollar amounts owned for business net 30 would have been in the $3,500 range average)

But regarding business net 30 on products what probably worked the best was that we were more particular than most about granting it in the first place. Paid no attention to Dunns reports and called the last reference in the list first (on theory that was probably the weakest) Slightest hint of being past due with other vendors or low dollar amounts and we didn't approve net 30 in the first place. Before I sold the business I think we lost $25 total. (then, with money from the sale I proceeded to loose tens of thousands in the stock market but that's another story :o )

Of some interest, Tapmatic was the same way....they were pretty tough with us when we applied as Tapmatic dealer back in the early 90's. As I recall they limited dollar amounts you could order at first and then gradually increased limits as some good payment history was established.
 
I think the most important thing here for you, is not to spend time thinking about this. It'll put you in bad form and mess up your productivity. You need to be getting work done for your good customers. Your time is money so don't waste any more on this. Just call a collection agency send them the relevant doc's and put it out of your head completely.
Some people have not paying suppliers down to a fine art and you may find that he's well known for this.
I had one customer that would leave me hanging for several months and would only pay when he needed some more parts made. It's stress you don't need.
You can't run a business not knowing when you're going to get paid. The last occasion I got 4K after 6 months and as per usual a purchase order the same day. I had my mind made up at that stage so I sent a quick mail saying pre-payment with any orders from now on. In other words F_ _ _ Off. There's lots of these types out there but there's also lots of good, successful, professional business people too.
Anyway, put it out of your head.
 
If the guy is selling your parts, and doesn't pay, he'll likely run out sooner or later. Then just give him the run around on the next order. Just indicate that you're happy to get the order, and then delay delay delay. At some point, this should put the onus on him to call you and find out why you're not shipping......as if he doesn't know.....and he might think about volunteering a payment to grease the wheels a bit.
 








 
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