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Recovering unpaid wages

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What is the name of your state? North Carolina

I started working for a small, family-owned computer consulting firm as an intern while I was still in college. When I graduated I was granted a full time position which I maintained for two years. The owner believed in employee ownership and after about a year and a half I accepted 5% of the company's stock in lieu of a small pay raise. It really wasn't worth much, but we all had a grand vision of greater things to come and hoped it would be of greater value later on.

We were a company of 4 or 5 individuals and became close friends as well as workmates. There would be times when checks would be a week or so late due to customers not paying and things like that, and nobody really minded. We all believed in the company and knew we would have no financial worries in the long run.

Then, financial trouble ensued. The treasurer (i.e., the owner's wife) "forgot" to pay a year's worth of payroll taxes and got in deep trouble with the IRS, the area's economy went south, and the owner and technical lead on most of our projects began having medical problems which caused him to either not be able to work or be only partially coherent when he did show up. Paychecks were written later and later as the finances got worse. Finally after getting as much a three months behind I had no choice but to find another job, leaving my friends to fend for themselves.

The total balance I was owed by the company when I left totaled around $8,300. They gave me their word that they intend to pay me back in full and I still believe them. But... I am now uncertain of whether this company will end up surviving for much longer. I was given an itemized list of everything I am owed and we made an arrangement for $150/mo minimum payment until the full balance is paid off. The balance is now down around $7,000, but they haven't been able to pay me for over two months now.

If I must take legal action to obtain my lost wages, how would I go about this? Of course my first preference would be for them to continue sending me payments, for them to stay in business, etc. but what if they end up going "belly-up"? As I understand it unpaid wages are paid back after debt to "secured creditors"... would it be possible for me to enter into an arrangement with them which would make me a secured creditor?

The company in question is an S corporation, I don't know if that is relevant or not.

Thank you



I'm a Northern Girl
I'm not up on who is a secured creditor and what order they come in. I do know that your first line of attack for an unpaid wage claim, should it come to that, is to file a complaint with the state Department of Labor.


Senior Member
As it is right now, your claim would be unsecured.
I would suggest you take action NOW to try to protect yourself in the event that they were to end up in bankruptcy. The first step would be to get a signed personal guarantee from the officers/directors of the corporation. Then, if the corporation were to file bankruptcy, the individual liability would remain.... unless they also filed personal bankruptcy. Another option would be to take a security interest in any equipment or inventory that they might have.

Talk with a local attorney about protecting your assets.


Well, about a month ago the primary owner started proceeding with filing personal bankruptcy.

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