Business owners like to handle matters on their own. Having your business be the subject of a lawsuit is stressful. It is difficult to be objective but consider that creditors have no other legal alternative than to sue. Below we offer three cases where the owners decided to handle the matter on their own. None got the result they wanted. Don’t let this happen to you.
A construction and remodeling company specializing in repair services elected to handle a $5,000 breach of contract case on their own. The company’s registered agent received and accepted the court summons. The company lost a default judgment to the tune of over $7,000. This included the original demand plus interest of over $1,500 plus plaintiff attorney fees plus court costs. Unpaid balances will accrue interest at a rate of 1.5% per month. The company now faces another suit of over $25,000 from another plaintiff.
Note: We often find that where there is one creditor action, another one may be lurking. We can help business deal with multiple creditors. Often times there is a personal guaranty of the debt, which will cause even greater stress if not addressed properly.
A business owed $60,000 for advertisement fees. The business owner indicated the provider ran more ad time than they were authorized even after they were told to cease. The business paid a portion of what they owed (beyond the $60,000) in several installments. The provider sued the business for breach of contract. In addition, this business was overdue on rent and had tax liabilities as well. The sum total of their liabilities approached $100,000.
The business owner indicated a close relative who was a CPA was going to evaluate the matter. The owner then proceeded to hire an attorney to resolve the suit. Two months later, the business owner had a tax lien placed against his personal residence. One month after the imposition of the tax lien, the business closed its doors. One week after the business closed its doors, the business faced yet another suit from a contractor. Eventually the business filed for bankruptcy.
Note: This truly was an unfortunate series of events. It is likely we could have kept the business solvent and saved a dozen or more jobs. The business owner used precious cash in a legal process that will consume even more cash with a bankruptcy procedure.
A business owed $13,000 for fees associated with a lease. Upon initial contact with the client, they indicated they were going to handle the matter on their own. A couple of months later, we received a call from the stressed business owner asking for our assistance. The client signed up for our services though the very next day, the court was going to impose a default judgment. Despite the judgment, we proceed to assist the client. Unfortunately, the client was very unresponsive to our information requests.
The client asked about the necessity in settling given the default judgment. We explained the consequences of an unsatisfied judgment, which included bank account garnishment. Despite repeated requests for the information, the client was not able to deliver content necessary to engage in a settlement discussion. After a few weeks of inaction, the client was served with a bank garnishment. The business, no longer a client of Sentinel Consulting, sought the services of an attorney to fight the garnishment.
Note: The business inflicted more stress on itself by not properly addressing initial legal action and then not providing required information to Sentinel Consulting. It is possible that the business will lose the entirety of the suit plus interest and plaintiff attorney fees through a direct deduction from their bank account. Add to this the amount they will have to pay their own attorney.
A house of worship faced a lawsuit associated with an unpaid lease. The church was responsible for getting documentation associated with a loan that would help settle the lawsuit as well as provide funds to move into their new building. The church not only paid rent for their temporary facility but they also had a note for the new building. The church delayed in getting the paperwork for months and altered the negotiation with the creditor, resulting in a default judgment. Further delays led to a garnishment against the house of worship. The lack of attention to the matter led to a judgment of $40,000 as well as attorney fees.