When a Parent Leaves Owing Money: Small Claims Court or Collection Agency?
A parent, Barbara Riegel, leaves your family child care program owing you money. Should you take her to court or hire a collection agency to go after your money?
If Barbara owes you money for days that you provided child care, your chances of winning in small claims court is very high (probably 90%). The only circumstances where a judge might rule against you is if Barbara's child was injured while in your care, or if you were grossly negligent in your treatment of the child.
If Barbara owes you money for failing to give you a two-week notice upon leaving, your chances of winning in court are more problematic. Legally, you should win since she violated your contract. Unfortunately, some judges will listen to a parent complain about the care her child received, and not enforce the contract. Your best defense in court is to tell the judge: 1) Barbara never complained about care before she left; 2) Barbara never made a complaint to licensing; or 3) licensing said the complaint was unfounded.
Some providers will go to court, not because of the money but because of the principle that the parent should not get away with breaking the contract. Going to court takes time and a little money for the court filing fee. There is no guarantee that you will win. Even if you do win, you may have to pursue Barbara further if she refuses to pay after receiving the court judgment.
Instead of going to court, you could hire a collections agency to contact the parent on your behalf in an attempt to collect the money owed you. Such agencies can write letters and call Barbara. If they are successful they will keep a percentage of the amount collected. This fee can vary, but it could be as high as 30%. To find out the names of collection agencies in your area, Google “collections agency in [name of your town].”
There is no right or wrong about which path to choose: court or collections agency. Before making your decision your first step should be to write a letter to the parent demanding that the money you are owed be paid by a specific deadline. Tell Barbara if the deadline is not met you will go to court or hire a collections agency. Such letters sometimes do work. If not, you can make a decision whether or not to proceed against the parent.
What do you do?
Tom Copeland - www.tomcopelandblog.com
Image credit: https://www.kompareit.com/business/business-services-collection-agency-vs-small-claims.htmlFor more information about contracts and small claims court, see my book Family Child Care Contracts and Policies.
