In all but a few states in the U.S. you’re allowed to be represented by a lawyer in small claims court, although that sort of defeats the purpose of handling relatively low value claims cheaply.
There are several ways to collect on judgments in your favor - by placing a lien on real estate, garnishing wages or garnishing bank accounts (which is what I did; it was as simple as sending the required form to every bank in the immediate area in hopes that the dickhead had an account there, which he did. The satisfaction was gratifying.)
Seeing that there’s a sizable tax advantage, it looks like the OP is doing the right thing.
Late to the party, but IMO, if you can get a $600 credit for writing off $1500, and be done w/ it, that’s a pretty good deal. That narrows it down to $900. So the proper analysis is, what efforts will get you how much of that $900?
I didn’t see anywhere a discussion of how significant this $1500 is in terms of your overall income. And how much do you value your time? Short of selling the debt to a collections agency or hiring one on contingent basis, even going thru small claims will require SOME time and effort on your part. (I successfully sued in small claims once when I was a destitute college student.) How many trips to the clerk’s office/cthouse will it take before you’ve used up $900 worth of time and aggravation? And then, if you get a judgment, you have to collect.
During the brief period that I did legal collections, I roughly estimated that no one could afford to hire me to attempt to collect a debt <$10k. And it might surprise you - as it did me - the extent many folk will go to to make themselves difficult to collect from.
You repeatedly mention that the debtor pisses you off. I know you won’t hire an atty for this debt, but one thing attys bring to many situations is their impartiality/lack of emotion. Litigating - or debt collection - for emotional reasons can be awfully expensive. And the process itself isn’t exactly fun. Find a way to live w/ it, put it behind you, and carry on w/ your life. (Not intended as criticism - solely my recommended course of action.) Take the tax credit, and forget about this asshole (other than adjusting your practices to try to avoid repeats in the future.)
If it was up to me and my emotions, this guy would be experiencing consequences for his actions. I guess the best revenge is taking an income tax credit and forgetting about him (I should cross-stitch that and hang it on the wall).
The client feels that we did not meet his expectations for the service he contracted with us for. It was a monthly contract - Jim would perform set duties each month, for a set fee. He became unhappy with what we were doing for him. If he had fired us at the start of the month, that would have been no problem - we would not have billed him. What he did was wait until November 23rd to fire us, when Jim had already performed about three-quarters of the duties for the month - I pro-rated his final invoice accordingly.
He feels like Jim did nothing and he wasn’t happy with our company anyway, and has flat-out stated that he will not pay this invoice. We feel like Jim did a significant amount of work, and the client should pay for that work. Would we win in court? I think we would, but it’s not guaranteed.
If we lived in a bigger city, I would be more tempted to take him to court, etc. As it is, we live in a small city where everyone knows everyone. He wasn’t happy with our work at the end, and there is a real risk that he would badmouth us to everyone he knows if we push this. We might win in court, but then have a hard time collecting from him, as well as having him ruining our reputation and hurting our business further.
I don’t think you should try and collect debts like this. Most good service companies I’ve worked with are generally very liberal with writing off the last portion of a contract when let go for poor performance.
Remember, by the time a client fires you, they’ve probably been unhappy with your service for quite a while before that point and good service companies live and die by their reputation to provide more value than they charge. Being willing to make it right when you discover you weren’t providing the value you promised goes a long way towards maintaining your reputation.
Often, the reason for letting you go isn’t that you were objectively bad, it’s that they thought you were going to provide X and you ended up providing Y instead and they didn’t need Y and so it wasn’t a good fit. Leaving the relationship on good terms can sometimes result in a surprisingly fruitful source of good leads as they will be willing to tell their friends that your company wasn’t a good fit for them but if they’re looking for Y, they should contact you. Trying to collect on a debt like this burns this bridge.
Far more important than the debt is to understand why did this client engagement fail and if there’s anything you can modify in the future to either deliver on your work better or better vet future clients so that expectations are aligned. Often, service companies feel like they need to take all comers because they need to make payroll or they’re fixated on making the sale but remember that a client engagement is as much about you vetting them as them vetting you and if you don’t do your due diligence, stuff like this can happen and tank your reputation, especially when you become enmeshed in your emotions and become obsessed with punishing your former client rather than focusing on how you can be a better company moving forward.
