ECN Forum Forums General Topics of the Trade Business Related Discussion Ripped Off

"That is not enough to get a lawyer involved, just turn it over to a collection agency and maybe you will get some of it back."

Once a collection agency get involved, nobody really wins either, but the agency will get paid no matter what the results are for either party, same as the lawyers.

When you get a collection agency involved, a few things may happen that may actually cause you to get no payment, what some don't understand is the credit reporting effect, lets say you turn over a payment for collection, the agency will then send in a credit report on the GC, now the GC who might of had a tempoary cash flow problem, now has a credit line problem, you just componded his ability to pay, and now with the higher credit line charges, money that he may have beeen able to pay you with is gone, it's now going to pay increased intrest charges, and this is what can put a small GC out of business, so before you shoot your foot off, try talking to the GC and ask if it is cash problems, and if it is, try to work out some terms that will assure payment.

A collection agency works, it gets you paid, if the party has the money, or makes sure you never see payment, by putting the party in a position that drives them out of business.

Another thing to think about, is this someone you would like to continue business with, if they are just going thru a cash flow crisis, collection agencies should be a last resort, only after all other options have run out.


[This message has been edited by LK (edited 03-08-2007).]

I've mentioned this technique before, and will do so again. In my state, a general contractor has to demonstrate financial responsibility to the tune of at least $25,000 liquid assets at the time of his filing. He is required by law to keep this liquidity, (however about .001% will follow that rule) as long as he is in business, or they have full right to revoke or terminate the license. Once any builder whines about not having the money to pay me for my billings, I remind them of this simple fact. A mention of having to go down to the regulated industries complaint office to ensure that the laws are being followed is about all it takes to get the ball rolling. Check out your own state or local rulings.

[This message has been edited by macmikeman (edited 03-08-2007).]

Mac,

If we had that law here, there would be less then 100 GC's in the state. We just has a issue of a large builder going bankrupt in our state, my bet is he din't have 25 cents in the company, all other peoples money, now we have a dozen subs that worked for him, going out of business, and laying off workers. But guess what, the courts did, they rewarded him with a loan, so he can finish the half built homes, and line his pockets, without paying any of the subs, great country ain't it!

That makes absolutely no sense at all; the collection agency only gets paid if they collect the dept, and then you both get paid.

The original topic was posted on 08-07-2006.

Then this on 03-07-2007
Its been seven months, I don’t think they guy intends to pay anything it does not look like a “temporary cash flow problem”. I dunno maybe I am wrong here but a client that strings you along for 7 month on $1,000 invoice is not one you want anyway, and if a they are flaky enough that a collection agency might put them out of business, then you really don’t want to do any more work for them.

Just my very humble opinion but I have eaten enough small invoices (and big ones too) like this over the years and I have heard every good story you can imagine, and like someone said before, GCs go to school to learn how to stall you just past your lien rights and its down right underhanded.

Another point I would like to make is that filing a lien on a job does more to hurt a GC than any collection agency could ever hope to do. It can sour the relationship with the owner, stop the money flow, prevent them form acquiring more work, and even put a GC with cash flow problems right out of business. If you would not hesitate to file a lien notice, or even a lien, then why hesitate to turn it over for collection?

Sure lawyers, liens and collection agencies are all last resort options, but isn’t that what this topic is about?

Not trying to be adversarial, I just have a lot of energy on this topic. Just recently I got burned for 30K by a contractor out of NJ, it was on a public project and local laws and lean options would not work for me, so after 6 months of trying to get my money I finally turned it over for collection, and got paid in 9 days.

It turns out the owner of the company did not know, that I had not been paid and the guy I was dealing with was not paying lots of people for what ever reason. All it took was one collection call to the owners cell phone while he was playing golf and my check was on its way. With my resources I never would have been able to research this company, find the owners cell phone and call him, but for 20% I got it done.

Just something to think about, and yes you are correct these options are a last resorts and will guarantee that you never work for that GC again.

[This message has been edited by ITO (edited 03-08-2007).]

Macmikeman-

Good suggestion, I will look into that too.

Who doesn't have "a lot of energy" on the topic?

Apart from the minor detail that we're in business to get paid ... one can't help but feel bad when they are made a victim.

Still, one has to 'keep his eye on the ball.' We earn our living by making things- not by standing around in the courthouse!

Hurt as it must, sometimes you just have to call it "tuition" and move on. There is some risk inherent in business.

And, of course, an ounce of prevention is worth a pound of cure.

My nephew hated to resort to it,but usually just the threat of a lien did thr trick:}

Without contract?Maybe?