How is % of interest when people owe you money

look 171 · 10-18-2011, 12:14 AM

A while back, some of you might remember my very good friend's sister screw me out of 6900 bucks for some remodeling work I did on her new house. I finally had a chance to deal with it and started talking to a lawyer instead of going through the small claims court route due to the added amount. How does one determine what the percentage of interest on money owe? If I am going to spend money I better get the most kick out if it. I may spend more on lawyer's fee then actually get money out of her. What if I win in court, that doesn't mean she has to pay? What if she claims she has no more money? How does the interest work then? Other then in my youth, back in college, a contractor screwed me out of 2000 bucks. Other then that, I have had very good clients. Until this little witch came along and I know her brother really well. Well enough to see him and his family ever weekend. That's the pisser. Any suggestions welcome.

Jeff

Rick V · 10-18-2011, 12:46 AM

Well if you are going the legal route to get your money back, I would use the interest rate that your bank is charging for a short term loan. Personally I would seek my money and have her pay the lawyer bills. You get your money back and she learns a lesson, unfortunately the hard way. Never lend money to a friend, that is the best way to add to the list of former friends, and nice guys finish last

on2wheels52 · on2wheels52's Garage

Jim

Rot 911 · 10-18-2011, 06:06 AM

Why aren't you asking your attorney these questions? In many, if not most states, interest only accrues after a demand has been made and a lawsuit filed. The interest rate in California is 10%. If you get a judgment you will still have to collect the money if she doesn't decide to just pay up. Either by garnishment or seizure of a bank account or property.

sc_rufctr · 10-18-2011, 06:13 AM

I can't really ad anything about an interest rates but it's good to see you're having a go at getting what's owed to you.

Good luck with the case.

Zeke · 10-18-2011, 06:36 AM

Unless you wrote an interest rate into the original contract AND had the payment schedule spelled out, when to pay, what to pay and if you don't pay, you probably won't recover any interest you tack on now.

Cost of collections is different. If they are very smart, they will take this down to the line and offer 50% of the total. Unfortunately, you'd be wise to accept anything you can get over that.

As you have surmised, 100% recovery is difficult. This is where the bird in the hand is better.

dad911 · 10-18-2011, 06:57 AM

If the lawyer is working hourly instead of on a contingency, you're throwing good money after bad. Been there, done that. Spent $3500 defending against a contractor that claimed we owed him $2500. When contractor finally sat down and looked at my correspondence, and realized we didn't owe him a dime, they dropped the case.

Small claims, or try to turn it over to a collection agency.

Do you have a contract, and did you lien the property?

McLovin · 10-18-2011, 07:03 AM

Quote:

Originally Posted by look 171

A while back, some of you might remember my very good friend's sister screw me out of 6900 bucks for some remodeling work I did on her new house. I finally had a chance to deal with it and started talking to a lawyer instead of going through the small claims court route due to the added amount. How does one determine what the percentage of interest on money owe? If I am going to spend money I better get the most kick out if it. I may spend more on lawyer's fee then actually get money out of her. What if I win in court, that doesn't mean she has to pay? What if she claims she has no more money? How does the interest work then? Other then in my youth, back in college, a contractor screwed me out of 2000 bucks. Other then that, I have had very good clients. Until this little witch came along and I know her brother really well. Well enough to see him and his family ever weekend. That's the pisser. Any suggestions welcome.

Jeff

First, for that amount, you can go to small claims in your state. The limit is 7500. Clearly, this is the way to go. Without the ability to recover attorney's fees (which you do not appear to have, I assume you have no written contract with an atty's fee provision), hiring a lawyer is just too risky on a claim that small. Odds are you will end up with a net negative result.

As to your claim:

1. You did remodeling work. Are you a licensed contractor? Did you have a written agreement? Depending on your state law, those may be important issues. They may provide a compete defense - an unlicensed contractor can't collect anything in some states, I think yours may be one of them.

2. If you can get over that hurdle, a judge can award prejudgment interest from the date of breach of an agreement in California. i think the prejudgment interest rate is 10%

3. If you successfully get a judgment against her, the judgment will accrue interest at 10%

4. Just because you get the judgment, doesn't mean she has to pay. But, there are lots of ways to enforce the judgment. How successful that will be depends a lot on her circumstances. For example, if she has a good job and gets a paycheck from a company, it is very easy to get to those paychecks. If she owns her house, and if she has equity in it, that's another way to get paid and pretty much assures you will eventually get paid, b/c you can put a lien on it. If she doesn't work, or have assets, it can be difficult or impossible. But if you get a judgment against her, and she doesn't pay, there are lots of legal tools that you can use to make her life miserable.

5. Interest will accrue at 10%, forever. That's pretty powerful. Even if she has no money now, she may in the future, and that judgment will grow relatively rapidly over the years at that high interest rate.

krystar · 10-18-2011, 07:56 AM

so she didn't pay on the remodeling job...i'd go back with a wrecking crew and take back all the remodelling involved. :P

plumb4u2 · plumb4u2's Garage

Quote:

Originally Posted by krystar

so she didn't pay on the remodeling job...i'd go back with a wrecking crew and take back all the remodelling involved. :P

I realize you are just joking, but I did this, however it is illegal

When something is installed on someones property it is against the law to remove it even if not paid for

I had installed a well pump for a customer a few years ago and he wrote me a bad check. After months of getting the run around from him I got pissed off one day when I was working in his neighborhood and pulled up in the drive way popped the cap off the well and yanked it on out.

I cut my pump off and dropped the pipe back in the well, never did hear from the guy guess he got a nice wake up call when he got home.

I knew this was illegal and I should not have done it, Im sure he could have filled suit against me even for trespassing, but it worked out for me and he got his karma

Christien · Christien's Garage

Quote:

Originally Posted by dad911

If the lawyer is working hourly instead of on a contingency, you're throwing good money after bad.

No lawyer on the planet would take a case like this on contingency. Slam dunk win, but that's the easy part. Collecting can be (and usually is) a nightmare.

If she claims she has no money, you do a judgment debtor examination (that's what it's called here in Ontario). She comes into a lawyer's office with bank statements, mortgage statements, pay stubs, bills, etc. Basically everything to prove her funds, or lack thereof. Then assuming you find anything, you can seize assets, house, or proceed with garnishment.

Seizing assets is usually futile - you need the local sherrif to go in and repossess goods. Not likely to happen. You might be able to seize a car, if she owns it entirely. Foreclosing on a house starts costs about $5000, so there has to be at least $10k equity in there to make it worthwhile. And if it's that close, you could get screwed if the property sells in a bad market - you'd be on the hook to pay out the mortgage first.

Garnishment is the best bet, but it's very slow, and of course only works if a) the debtor has a job and b) you can find her after she gets a new job. You can garnish a bank account and clean it out, but most people don't keep significant $$ in their account.

My cut off with stuff like this is $5000 - it's just not worth pursuing anything less. So it's probably worth it, but it will be an uphill battle all the way.

Good luck, you'll need it.

look 171 · 10-18-2011, 08:55 PM

Yes I am a Lic. contractor. I was not going to go after her since I knew I was not going to recover my money. I was chatting with my next door neighbor about people getting burn. I just mention what had happened to me. he was mad as hell and demanded to take the case on for me free of charge and try to get my money back and teach the little girl a lesson. He and I re-plumber his old house over several weekends a few years ago. He is a nice guy, so I did not charge him a dime. I did find out tonight, it is 10%. He even told me, collecting would be a b#tch.

McLovin · 10-18-2011, 09:07 PM

Does she own the house that you did work on?

If so, you have a good shot at recovering, eventually. You'll record the judgment and if she ever wants to sell the house, or refinance it, you will be contacted by the escrow company and you will have to be paid off. And, in the meantime, your judgment will accrue interest at 10%. Where else can you get 10% interest??

If you have a lawyer willing to help you for free, you should take him up on it.

But, I still think you should go to small claims court. This is not a complicated case, you are well within the limits, and you'll get to trial in 60 days, not 12-18 months.

Your lawyer neighbor can help you quite a bit in preparing the small claims paper, a trial brief, arranging your exhibits, explaining how a trial works, and helping to prepare your oral argument.

look 171 · 10-18-2011, 09:24 PM

That was his advice too, but he was willing to go to court for me if need be. Can't beat that. I don't care if its 60 days or 60 months. I have time. the 105 interest sound damn good, sure as heck better then the bank or the market. He think I have a very good chance as well. He really want to get me some payback, I don't know why.

jorian · 10-18-2011, 10:15 PM

Bingo - This is what I would do. Be patient and you will get paid. Your registered lien/judgement/mortgage will rank in priority (needs to be paid) before she can sell or refi. I have done this successfully.

Quote:

Originally Posted by McLovin

Does she own the house that you did work on?

If so, you have a good shot at recovering, eventually. You'll record the judgment and if she ever wants to sell the house, or refinance it, you will be contacted by the escrow company and you will have to be paid off. And, in the meantime, your judgment will accrue interest at 10%. Where else can you get 10% interest??

If you have a lawyer willing to help you for free, you should take him up on it.

But, I still think you should go to small claims court. This is not a complicated case, you are well within the limits, and you'll get to trial in 60 days, not 12-18 months.

Your lawyer neighbor can help you quite a bit in preparing the small claims paper, a trial brief, arranging your exhibits, explaining how a trial works, and helping to prepare your oral argument.