What steps do you guys take, or what is the right way to go about, to collect past due payments?

Long story short, a client paid my former employer due to a mix up in tax info. They refuse to chase down the incorrect payments and pay me for my services. They suggest that I make the collection, but if I do that, I don't have the tax info at the end of the year.

I think it is their responsibility to correct the error.

To this point, payments are 5-11 months past due and total a few thousand dollars. I've attempted to collect numerous times. I don't know what I can legally do or say. Should I turn them in to TREC/TALCB, file a claim in court, or what?

Why will your former employer not pass along the payment?

Do you not do your taxes on a cash basis? It wouldnt have tax due until your receive the money.

Not my field but it seems your claim is with your client and that is where the collection would land. Do you want to retain the client?

SteveBott said:

---

Not my field but it seems your claim is with your client and that is where the collection would land. Do you want to retain the client?

---

No, not after this. I have more work than I can handle and haven't worked for them in 5 months.

dallasiteinsa02 said:

---

Why will your former employer not pass along the payment?

Do you not do your taxes on a cash basis? It wouldnt have tax due until your receive the money.

---

I get statements from my clients at the end of the year. If they pay him, then he gets the 1099 at the end of the year and has to pay taxes or report the income that he didn't earn and pay a contractor that no longer works for him. I think the best way is to get the client to correct their mistake.

Start with a call to a buddy lawyer to get an idea of the process. You can do the first round of paperwork which is a demand letter giving them 30 days to resolve the dispute. Lay out your work product that has not been paid.

If they don't pay call the lawyer for next steps.

Sasappis said:

---

I am confused. Has the client paid your former employer and they in turn are refusing to pay you?

If so, unless you have a direct contract with the client and they were to pay you directly, it seems like you complaint is with the former employer. It could be an employment issue where they owe you unpaid wages or it could be a more traditional tort issue where they are unjustly being enriched and need to pay you.

If the client owes the money you can just collect like any unpaid bill. If the former employer owes it you should make formal demand and then move on to more traditional collection methods.

How much money is owed will determine how much money you are willing to spend on recovery.

---

I had separated from my former employer many months before any of these assignments were initiated, so he was not involved in any way for the work completed.

There was a mix up in the tax information provided. I think they had it on file from a previous job that I had done for them while working for the former employer. I made it clear when I signed up again that I had started a new company.

I haven't contacted the former employer as he has no knowledge of the work and was not involved in any way.

Wouldn't the easiest route be to contact your former employer and see if they are just willing to pass on the funds to correct the error? Or at the very least if they will refund the money to your client so they can pay you?

Should be pretty clear to them that it's not funds they did any work for.

Edit: And Sasapis beat me to it while I was typing!

Sasappis said:

---

So, from a straight legal perspective if you informed the client that you were no longer with the former employer and they were to pay you directly and yet they erroneously paid the former employer, then you absolutely have a claim against the client and their mistaken payment to the former employer is not a defense to the debt they owe you.

However from a practical standpoint the easiest and quickest way for you to get paid is for you and the client to jointly contact the former employer, inform them of the mistake and request a refund of the amount erroneously paid either directly to you or to the client. This assumes that you actually believe the client in the claim that they have actually paid the former employer.

---

I believe they probably did pay him, but in searching the net, I see complaints about difficulties in collecting. Some mention a factoring company won't accept invoices from them. I don't use a factoring company, and don't know much about them. The general consensus in the appraisal world (from the internet) is the client is slow.