How do I Get Paid?

A few months ago, a woman came to me because she was embroiled in payment disputes related to her work. For some context, a year ago she decided that she was going to be going out on her own and starting a job recruiter business. She was very excited to begin living the life of an entrepreneur. She had her first client and was ready to find them the perfect candidate.

Within a few weeks she had found the perfect candidate and the client had hired this candidate to their team. The woman had completed the job and it was now time for her to get paid. However, despite multiple promises from the client, she never received any payment for her services.

She called our office and, while we were able to sort this out for her, it was devastating to hear that she had had this issue with her very FIRST client.

Whatever the client’s excuse, you have a right to be paid for services you have performed. As a lawyer, I can appreciate a business owner’s attempts to get paid – calling the client, sending letters to the client, etc. – sometimes you need to take legal action.

Demand Letters

Demand letters are formal documents sent to address issues like payment disputes, aiming to resolve the matter without resorting to court proceedings. It initiates the negotiation process in hopes of reaching an agreement. Typically, lawyers draft these letters, making them the preliminary step before taking any legal action.

The unfortunate reality of all of this is that you can try calling and emailing your client all you want, but sometimes a strongly worded demand letter from an attorney is all it takes to get paid.

Record a Construction Lien

This one is a little more specific. As the name implies, a construction lien is a lien you can file against someone’s property if you performed “construction” at the property. Pursuant to MCL 570. 1107, “[e]ach contractor, subcontractor, supplier, or laborer who provides an improvement to real property has a construction lien upon the interest of the owner or lessee who contracted for the improvement to the real property…”.

While it is a very useful remedy, the Michigan Construction Act (Act 497 of 1980) is very complex. There are strict deadlines you have to follow and numerous requirements that have to be met for the lien to be valid. That being said a construction lien is like any other lien in that in order to get paid, you must foreclose on the lien. If you fall into this category of laborers, please seek the advice of legal counsel prior to recording a construction lien.

File a Lawsuit

While this is not ideal, your only option to getting paid may be to file a lawsuit. As an attorney, I acknowledge that litigation is costly and timely, but your alternative (if it comes to this) is to do nothing and lose out on money you rightfully earned.

The good news is, if you are owed $7,000 or less, you can file in small claims court (fight your client “Judge Judy” style). No attorneys are involved, and the court will schedule a hearing with you and your client to settle the dispute.

If your claim exceeds $7,000; and you can’t justify decreasing it, you must file a lawsuit in the appropriate court for breach of contract. (District court or circuit court)

Garnishment

To be frank, the vast majority of cases settle. Meaning most of the time, you will get paid in lieu of continuing the litigation. However, sometimes you sue your debtor and they never respond, in which case you will receive a default judgment. Other times, there may be a legitimate dispute and you will be forced to seek a judgment at trial. Whatever the case, if you received a judgment against your debtor and they won’t pay out of good faith you will have no choice but to garnish the debtor.

A couple of things about garnishment:

1. In Michigan, money can be garnished from paychecks and other earnings; credit union and bank accounts; and/or State tax refunds.
2. There are two types of garnishment: periodic and non-periodic.
3. Notably, there is money that cannot be garnished – think things like social security benefits and disability payments.

That being said, I’ll stop there because there is so much more that goes into garnishment.

Deceased Client

While it may not be the first thing we think of; unfortunately, the death of a client is very much a possibility. If you performed services for an individual who passes away, you have two options:

1. File a creditor claim against the person’s estate: it may happen that your client’s heirs will formally probate the estate of your client. This means that they will either apply or petition the local probate court to administer the estate through the courts. If this happens you will want to file a claim against the estate with the court to reserve your right to a portion of the client’s estate. Most likely the heirs will want to settle the debt, but even if they don’t, they will have to prove that the debt is invalid or otherwise.
2. If no formal estate is opened, you may have to petition the court yourself to open the estate so you can collect against the client’s estate.

Similar to the remedies explained above, the probate process is complex. If you are having a difficult time with your payment disputes, contact Denise Medina at Fausone & Grysko, PLC. Denise can be reached at (248) 380-0000.