QUICK LAW CHECK-UP: Do your company agreements have:
1. Provision for attorneys’ fees and costs in the event of non-payment;
2. Choice of law provision and venue provision: e.g. “Venue and jurisdiction are proper only in Wake County, North Carolina”;
3. Do they provide for interest at no more than 1.5% per month (for revolving credit accounts) .
Is your company owed money in North Carolina by a North Carolina company or individual? When someone owes your company money, whether on account or otherwise, there are only two ways to collect. Obviously you can try to solicit the individual/company or get a collection agency to harass them. Often a letter from an attorney gets payment or a negotiated settlement. But ultimately, when those methods don’t work, you will have to resort to legal process – i.e. sue them. If you have an attorneys fee provision in your signed and written contract you can collect an additional 15% based on the principal owed. If the amount is more than $2000, it definitely pays to pursue it.
SMALL CLAIMS COURT?
Some business owners resort to small claims court first. A smart idea? The good news is that the jurisdictional cap has been raised to $10,000.00. So, if your claim is for less than that, you can (but don’t have to) file in small claims court instead of district court or superior court. The bad news is that even if you prevail, your defendant can appeal “de novo” to district court. Meaning, on appeal – your judgment is disregarded and the matter is reheard all over again in district court. This can be a waste of time for the business owner if the defendant appeals. If the judgment is not appealed, it becomes final.
DISTRICT COURT AND SUPERIOR COURT – What’s the difference?
These court handle different matters with some matters appealable to Superior Court from District Court. But more importantly for the business owner’s purposes, they have different monetary jurisdictional limits for cases brought to collect money or other civil damages. Even some lawyers are not aware that those jurisdictional limits have increased in 2013. On June 19, 2013 Governor Pat McCrory signed legislation that beginning on August 1, 2013 doubled the small claims threshold to $10,000, and increased the District Court limit from $10,000 to $25,000. As a result, only cases in which more than $25,000 is at stake will be heard in Superior Court. Moreover, arbitration has now become mandatory in district court cases where the amount in controversy is under $25,000.
ATTORNEYS CAN HELP YOUR BUSINESS COLLECT MONEY OWED
Attorneys will work on a contingency fee basis (for a percentage of the amount collected) or on an hourly basis, to collect these monies owed to your business. They will also be able to gauge the likelihood of recovery based on the assets of the company or individual that owes you money. The process is initiated by a complaint for money owed and summons to the defendant. The defendant must respond or answer the complaint within 30 days. The matter is ultimately concluded by default judgment (the defendant does not respond and a judgment is obtained), summary judgment (a motion is filed by us to prevail on the existing pleadings and evidence), or at trial.