Suing a client isn't top of anyone's list of things to do but if a client is refusing to pay, it may be the logical path to getting what's owed to you. Before you take your client to court, you'll need to make sure that you're prepared, have a good case and that it's worth the cost of your time and money.
When you're thinking of suing for nonpayment, here are your next steps.
Determine Your Case
As with any legal course of action, you need to determine if you have a winnable case. Here are some questions to ask yourself:
Do you have a right to demand payment of this client?
If you have a written signed contract, for example, and you have upheld what you said you would do, there's a solid chance you can demand payment. If you don't have a signed contract but you do have emails or other documentation that states they agreed to pay you, you may also have a good case against your client.
Do you know if the client has the finances to pay?
You can do research on your client to determine if they have the resources available to pay you in cash or other liquid assets. If your client is claiming bankruptcy, it may be time to have a professional collections agency help collect the debt.
Have you gathered all documents needed to prove your case?
These documents will include past due invoices, total amount owed, documentation that shows all communication and attempts to collect.
Is it worth the cost?
Compare what your client owes to the cost of litigating. Determine if the case should move forward or if you should send the case to a collections company.
Send Demand for Payment One Last Time
Now is also the time to your client know that they're still in default and that you're consider legal action. Often, a threat of litigation and will move them to act quickly. Request the full amount owed with additional late fees and provide a deadline for the expected payment. Even if the client still doesn't pay what they owe you, this demand letter is important evidence for your case.
Get Legal Advice
One more important step before you sue a client for nonpayment is to get accurate legal advice. A consultation will help you be better prepared and offer insights into things you may not have considered already. If you've used a professional collections agency, like Enterprise Recovery, you may have access to a legal team to offer advice.
As an example, our Legal Services include:
- Reviewing documentation for evidence to support litigation
- Identifying jurisdictions to file the claim
- Determination if legal fees can be collected as part of the claim
- Reviewing financial status of the debtor
- Referral to a law firm or attorney to handle your case
Once our legal team has reviewed the client invoices and contracts to make sure they are valid, and determines the debtor can pay, the account moves from "Legal Review" to "Litigation". At this point, Enterprise Recovery's legal team is helping you sue the business who owes you money.
File a Complaint
If it has been determined that the claim is worth the cost in time, money and other resources, the next step is to file the claim. With the Enterprise Recovery legal team on your side, we assist along the trial journey with any additional information required to obtain a settlement or judgment in your favor. In other words, we help you win!
When you choose to sue for nonpayment, you must be prepared with documentation to prove a valid case and that your client is viable to pay. Depending on the complexity of your case, you may be able to go to small claims court or have a lawyer represent you. If you win your case, the judge may also likely rule that your client has to pay your legal fees as well. Of course, all of this hinges on having a winnable case. Talk to a lawyer to make sure you do before you move forward.
