Going out of business...owes me $$

Discussion in 'Business Operations' started by 1BadHawk, May 10, 2005.

  1. 1BadHawk

    1BadHawk LawnSite Member
    Posts: 127

    I have a small car dealership that I service for the winter with snow removal. They paid prety well, and promp up to the last statement. Its been about 2 months or so now and no payment. Ive sent 2 reminders, and my next step was to take them to court. BTW: we do have a contract in place.

    Anyhow, I drove by the property the other day and appears they may have either moved or gone out of business. The lots is empty, and the office looks like it may be too.

    Am I SOL on the balance owed ? what can I do?
     
  2. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    See if they filed for bankruptcy.If so,then you are more than likely,SOL.
     
  3. pagefault

    pagefault LawnSite Senior Member
    Posts: 492

    How much do they owe? If it less than $2000 or so, I'd forget about it.

    A) If they are going out of business (as opposed to retiring), they've got enough problems. You don't want to be that lawn care guy that sued them for $500 while they were losing their business. Talk about bad word of mouth. Besides, there, but for the grace of god...

    B) Getting a judgment takes time. Collecting on that judgment takes time. It's a huge pain in the ass. I've got a judgment for $25k that I am trying to collect and sometimes I wonder if that is worth the trouble. I may never be able to collect a dime and I will never get my time back.

    They don't need to file bankruptcy. If they cease operations, you're pretty well screwed. They sell their assets. They pay their creditors until the money is gone. They shut down and there is nobody to collect from. Then, you have to go through all kinds of crap to see if they personally kept any of the money or assets and try to get some of that. It blows.
     
  4. Broker

    Broker LawnSite Senior Member
    Posts: 382

    The last two years I have lost $28,500.00 to stuff like that. Move on and just be thankful that it was not worse.
     
  5. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    and I'd bet they were and INC which means if there are no more business assets there is nothing that you can go after because they will not be responsible for it personally.
     
  6. pagefault

    pagefault LawnSite Senior Member
    Posts: 492

    Yep, unless you can show that the Inc was just one paper, but that's just more and more of a hassle. Right now, I'm looking to see if I can forfeit the judgment and write it down as a loss on my taxes. With the interest owed, if I can write it all off at least I'll get to put about 10 grand in the bank.
     
  7. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    <marquee loop="infinite" bgcolor="#DDDDDF"><font color="#000000">Have a tax question? Ask our CPA. Click Here </font></marquee>

    Hi pagefault,

    That is a very interesting idea. If you want to, send the question to our CPA and see if they advise that or not. Use the scrolling link above.
     
  8. pagefault

    pagefault LawnSite Senior Member
    Posts: 492

    Thanks. I've posted the question.
     
  9. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    The answer is YES you can and it gets even better really (in the form of "get back"). You can drop the Judgement, and Write it off, and make sure that you then FORGIVE the debt and send the person that owes you the debt a 1099 for the full amount of that Forgiven Debt and that way the Person/Business that owes you the money MUST then Claim it as Income on their Federal and State Tax return next year! The key to being able to 1099 them is that you must forgive the debt and that in turn legally makes it "income" for them.
     
  10. pagefault

    pagefault LawnSite Senior Member
    Posts: 492

    I'm going to get a second opinion, but if you're right, you're my hero. That's freaking awesome.
     

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