Entrepreneurship & Small Business

Unpaid bills: how much interest can I add before sending bill to collections

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  • Mar 15th, 2011 8:40 pm
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Member
Nov 23, 2007
400 posts
36 upvotes

Unpaid bills: how much interest can I add before sending bill to collections

A law firm owes me over $1000.00 for work I did 2 years ago preparing reports.

They have not paid any of the invoices and are not returning my phone calls. Unfortunately a staff member in charge of billings let this go for two years until she told me.

I am about to send the bill to a collection agency and I have a few questions about it.

How much interest can I legally add to the bill?

Also if an individual lawyer requested the report, but sent the request under his law firm's letterhead, can I go after the individual lawyer for payment, rather than the incorporated law firm?

Also I have heard of taking people to small claims court for unpaid bills. I can't understand the sense in this, if there is a judgment in small claims court then it is just one more bill they won't pay also.

I have no experience in this as this is the first sizable bill that has not been paid so any advice will be appreciated. In the future I will not do any work of this sort until I am paid in advance.
6 replies
Deal Guru
Aug 2, 2001
12749 posts
3649 upvotes
trilinearmipmap wrote:
Jan 13th, 2011 3:32 pm
Also I have heard of taking people to small claims court for unpaid bills. I can't understand the sense in this, if there is a judgment in small claims court then it is just one more bill they won't pay also.
In Alberta at least, Small Claims Court victories start the process to (when suing against an individual) garnishing wages, seizing property, etc... I'm sure with a business the same would apply.
[OP]
Member
Nov 23, 2007
400 posts
36 upvotes
RobberBarron wrote:
Jan 13th, 2011 6:32 pm
The interest rate you can claim is that which was agreed upon between the parties. If you were not express about charging interest or the rate that would apply after a certain period, then you will generally receive the "prescribed rate" for pre-judgment and post-judgment interest in your lawsuit, if you make a claim for such. Generally, the courts will award interest (at rates set out in the legislation (i.e. "prescribed rates") for the period between the time you should have been paid and the time you are awarded judgment (i.e. pre-judgment), and then for the period after receiving judgment and actually getting paid (i.e. post-judgment). However, as I've stated, those interest rates are set out in the legislation. As you have only stated that you are from "Earth", you will have to do a search for your own specific province's legislation. If you are in Ontario, those rates are set out here. If your agreement had higher interest rates set out in it, then you would make claim for those rates.

As for suing the lawyer personally, if it was indeed an actual corporation and he used his letterhead, then its a corporate obligation. You likely want to enforce the contract against the corporation, not him personally. You CAN however sue the lawyer personally under tort law for various other grounds such as misrepresentation, if there is a basis for such. If you don't know what that is then ask your lawyer to explain the concept of 'concurrent liabilities' and the rules of 'vicarious liability'.

Bottom line: if you're going to be suing a law firm, I would strongly suggest you retain a lawyer to represent you. Otherwise, you'll likely be in for quite the ride if the law firm decides to defend or use procedures to their advantage. They are professionally trained in law after all, which you aren't (as can be seen by your basic-type questions). After all, if this matter does proceed to court, you'll need to be very knowledgeable on law and the court procedures, or you could seriously prejudice your case.

You are correct, law was my 2nd choice if I didn't get into my current field. It looks like I would be better off going to a collection agency rather than taking these jackasses to small claims court.
[OP]
Member
Nov 23, 2007
400 posts
36 upvotes
RobberBarron wrote:
Jan 13th, 2011 8:35 pm
Actually, I think going to court is your better option. Any lawyer worth his salt will know how to stop the collection agency from getting any results for you and quite quickly. The collection agency's hands can be tied very quickly using various legal strategies-----but courts, on the other hand, are a whole different ball-game and are not as restricted in what and when they can do things.

Please explain.

If I go to small claims court, I pay a fee to file the claim, I put in quite a few hours of my time preparing, and if I make a small mistake the lawyer will win the case despite me being in the right. Then even if I win the case I will still be faced with trying to collect my money.

If I turn it over to collections, they write and phone the lawyer, and if he doesn't pay his bill, it goes on his credit report. Removing bad things from the credit report, as I understand it, is the only leverage a collection agency has to get money from someone. Anyway if I am missing something here please explain.
Deal Addict
Dec 13, 2007
1488 posts
37 upvotes
Toronto
So what they are lawyers? I suspect they are simply too busy making money to pay puny 1K bill. They don't have time for that, chances are they won't have time for the court, in which case you win by default. Or they'll notice and pay. I don't think they'll want to wriggle their way out in a small claims over such a small matter. Judges there will not be impressed by a legal firm playing tricks against unrepresented client in an "unpaid bill" case. It is a small claims court -- for poor :)

Before you go to court -- send them the invoice last time -- by fax (from a postal office) and by registered letter if you want to be extra sure (unless you already did so). Legally, if they don't contest your invoice they accept their liability for it. This way you will have a proof they they did receive it. With email or mail they can always say it was lost or something.
Deal Addict
Dec 13, 2007
1488 posts
37 upvotes
Toronto
I'm not a lawyer so obviously can't say for sure. I remember years ago when I was dealing with some collection agency over some ridiculous deal where you get some stuff for free but then need to cancel the subscription or else they keep sending you stuff but not free any more. So I've researched and somewhere it was said if you receive what you consider a bogus invoice don't just shred it (I did), deal with it. Otherwise you are considered accepting the charge.

That said, I trust you know better!
Newbie
Mar 14, 2011
1 posts
toronto
RobberBarron certainly knows what he's talking about and I'm grateful for the informative posts.

I would like to get in touch with you regarding a collections issue, but you don't accept private messages.
Is there any way to get in contact?

Someone owes me money and their dispute was that the work was not done, however, there is absolutely no mention of that obligation (or even that type of work), outlined in the contractual agreement.

They are now refusing to pay.

I'm wondering what my options are in terms of a collections agency as I'm reluctant to take them to court for the same reason noted above - if they won't pay now, they won't pay later.
I understand that their lawyer can tie up the collection process, as well, but I'd love to hear your opinion as to what I could do.

Thank you for reading and for your helpful posts!
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