One of the themes that I have stressed in many of my articles, which is also a theme I stress in daily practice, is avoiding misunderstandings by writing up your understandings, hopefully with the help of a qualified attorney. But what if a misunderstanding does arise? Is it off to court you go?
By far the most frequent calls I receive are from disgruntled horse people that are owed money due to a misunderstanding. Trainers don't get paid for training costs. Sellers don't get paid for the full cost of the purchase price. Barn owners don't get paid board due, or boarders do not get their deposit back. The scenarios are endless, but the theme is consistent. Usually the dispute involves enough money to hurt, but not enough that the client wants to hire an expensive attorney. The purpose of this article is to provide a brief, (simplified,) discussion regarding traditional and more innovative methods for dispute resolution.
The most traditional approach is to hire an attorney to collect the bill. The major disadvantage of this approach is the cost. While this may still be the best option, other alternatives can be considered.
First, you may want to write your own demand letter. Specify what is owed, what the basis or rationale of the debt is, and request that it be paid by a specific date. It is not particularly effective to express the depth of your outrage in this letter. Rather, keep to the basics, and keep it business like. One caveat: beware of running afoul of your state's, and the federal debt collection practice act, which apply to certain unfair debt collection practices. While this will not usually apply if you are simply writing a letter to demand what is owed you, avoid harassing language or threatening phone calls. For a more detailed review, talk to an attorney in your state or talk to your state's attorney general.
If the letter is not effective in resolving the debt, you can take many cases to conciliation court. Also called small claims court, in many states these courts are suited for simple collection cases. Dollar limits ranging from $5,000 - $10,000 can be handled without an attorney. Prepare for court by outlining the basis of your claim. Like in the letter, the same advice applies: be business like and avoid too much extraneous detail or emotion. Horse owners tend to want to tell the "whole story," including unnecessary and irrelevant details that do provide a certain flavor but may distract the court from the basis for the claim. Judges, remember, are usually dealing with overloaded dockets. They appreciate concise statements of fact with a clear outline of the basis of the claim. Often times filing the case triggers resolution of the claim. Sometimes the court date shows up, but the defendant fails to show up, which may also lead to a judgment in your favor. While receiving the judgment is a victory, it is an empty victory if it cannot be collected. Collection leads to other kinds of issues, such as the viability of the defendant. Some conciliation courts will assist you with collecting the judgment, or you may find it necessary to consult with a collections attorney.
Besides these traditional approaches, you may also consider mediation or arbitration. If the debtor has failed to pay because they dispute the bill on some basis, it may be wise to agree to have it mediated or arbitrated. For example, you could mutually agree upon an attorney or licensed mediator that will listen to both sides, and then discuss the relative merits of each side with the parties, as the mediator tries to bring the dispute closer to resolution. Alternatively, you could agree to binding arbitration, where both parties present their sides, usually with the help of an attorney, and then agree to abide by the decision of the arbitrator. Other alternative dispute mechanisms exist, such as summary jury trials, and may be discussed with local counsel.
It is certainly better to avoid disputes, but even in the best of worlds humans will still have misunderstandings. Before engaging in expensive litigation, consider the alternatives. One alternative to consider is that while you know you are owed the money, it may not be worth the
cost or time to fight it because the defendant is judgment proof. If you decide to fight it, talk to an attorney about what approach is most cost effective, and fitting with the nature of your problem.