Small Business Debt Collections

[markyg]

What is the name of your state? CA
I have a small appraisal business and we have been having trouble with some delinquent accounts. Most are between $300-1500. They are for appraisals that were ordered by loan officers at various companies. All of our collections efforts have failed. At this point is small claims court the best option? And do we take the company or the individual to court? If the company has recently closed down what options do we have? Any advice would be greatly appreciated.

 

[seniorjudge]

Q: At this point is small claims court the best option?

A: Yes.


Q: And do we take the company or the individual to court?

A: Whoever ordered the work.


Q: If the company has recently closed down what options do we have?

A: You are SOL and that does not stand for statute of limitation.



By the way, you must be the only appraisal company in the nation that bills folks. Most appraisers that I am aware of will not get out of the car till they see the green.

I suggest you adopt that policy also.

 

[Chien]

I agree with SJ, except that I would name both company and individual on a principal-agent or respondeat superior (employer is responsible for the acts of employees) theory.

It would cost you one more service charge, but Small Claims can be quirky. If you name the employee, and the judge decides that the employee “was only doing his job” and you should have named the employer, you don’t get a chance to go back and re-do it. Your case is finished – permanently. The employee owes you nothing and you can’t sue the employer.

On the other hand, if the judge decides only one is liable, the other defendant gets dismissed. Think of it as insurance.

If the company is out of business, you name who you can find and hope for the best.