Why Sue a Deadbeat Customer Over Unpaid Bills?

As a freelance writer, I have had my fair share of experiences dealing with clients who chose not to pay me for my work. I’ve been advised on multiple occasions to take non-payers to small claims court. While I have never felt like court action was right for me, there are legitimate reasons for suing deadbeat debtors over unpaid bills.

Company’s fighting to get paid by deadbeats need to weigh the benefits of filing a lawsuit with the known downsides. A decision to sue isn’t necessarily black-and-white. It is often quite complicated. But in terms of why a company might sue a deadbeat customer, there are as many possibilities as there are lawsuits.

3 Reasons to Sue

A single post cannot do justice to the many reasons companies choose to sue deadbeat customers. Nonetheless, here are three reasons that might help you understand the thinking behind filing a debt collection lawsuit:

1. The Debt Is Sizable

My own experiences with deadbeat debtors have all involved relatively small amounts of money. Compared to the time and money I would invest in a lawsuit, what I stood to gain from going to small claims court wasn’t worth it. So for me, lawsuits were never the wise choice.

On the other hand, what if the debt owed to me were sizable? That is a big thing for a lot of companies. If a company is looking at an outstanding debt worth thousands of dollars, going to court may be the best thing possible. Even more so when you are talking tens or hundreds of thousands of dollars. No company wants to walk away from that much money.

2. The Debtor Is a Repeat Offender

The size of a particular debt aside, another good reason for taking a debtor to court is to put an end to what has been repeated behavior. In other words, maybe you have a company who has run into problems with the same customer time and again. It has been years and the customer’s behavior doesn’t seem to change.

A civil lawsuit ending in a judgment might be the motivation necessary to force the customer to change his ways. At the very least, that customer probably won’t be back to make future purchases. The lawsuit effectively ends the business-customer relationship and prevents any future bad debts from accumulating.

3. Business Financial Struggles

Some companies have no choice but to take deadbeats to court because their own businesses are struggling. One of the reasons for that struggle might be too many deadbeats not paying what they owe. And if that is the case, winning judgments against those customers might be the only way the company survives.

A Lawsuit Is Just the Start

The one thing companies always need to remember about filing lawsuits is that doing so is just the start of a much longer collection process. According to Utah’s Judgment Collectors, a successful lawsuit ends in a judgment being filed in favor of the company and against the deadbeat customer.

What happens next? Judgment Collectors says that enforcing judgments falls on creditors. The company must retain an attorney or contract the services of a collection agency in order to successfully enforce the judgment. Many companies try to enforce on their own, but most fail as a result.

Sometimes it’s not worth the time and expense to go after deadbeat customers in court. Other times it is. Each case must be judged on its own merits, based on the creditor’s needs and resources. No matter how you slice it, taking a deadbeat customer to court isn’t easy.