Bankruptcy Law/Bad debtor

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Question
Dear Mr. Lee,

I am currently running a small business selling spare parts to another company on 30 days credit term. It has been over 60 days and the debt has yet to be settled. 50% deposit was paid initially upon delivery but the remaining sum is not. Now the sum isn't large and I am tired of all the follow-up calls and I don't want to use lawyer for this "small" stuff. If I make it public disclosing this bad debt online at every social media like facebook and others so that other small businesses like me dealing with (or will deal with) this bad debtor may know it to be a bad paymaster and refuse to do business with it, will I be risking lawsuit from such disclosure? By the way, I have the signed invoice to prove this is not some made up stuff. Is there any section of the law that shines light on such matter? If I insist on such disclosure approach, do you have any suggestion on making this legally acceptable?

Answer
Questioner:     Choo
Private:   No

Question:   Dear Mr. Lee,

I am currently running a small business selling spare parts to another company on 30 days credit term. It has been over 60 days and the debt has yet to be settled. 50% deposit was paid initially upon delivery but the remaining sum is not. Now the sum isn't large and I am tired of all the follow-up calls and I don't want to use lawyer for this "small" stuff. If I make it public disclosing this bad debt online at every social media like Facebook and others so that other small businesses like me dealing with (or will deal with) this bad debtor may know it to be a bad paymaster and refuse to do business with it, will I be risking lawsuit from such disclosure? By the way, I have the signed invoice to prove this is not some made up stuff. Is there any section of the law that shines light on such matter? If I insist on such disclosure approach, do you have any suggestion on making this legally acceptable?


Hello Mr. Choo:

I am answering your question because I am one of the lawyers in the bankruptcy and debt collection sections on the Allexperts.com site and, although your initial question appears to be addressed to a “Mr. Lee”, you posted it on the site to be answered by any of the debt collection  law “experts.”       I am seeing your question as having two parts:   (1) Can you be held liable for if you publish comments on social media demonstrating that your debtor and former customer is a “dead beat”, is having financial problems, etc.? and (2)  What is your best course of action at the present time.

To answer the first question, I will specifically address each question that you asked.     

If I make it public disclosing this bad debt online at every social media like Facebook and others so that other small businesses like me dealing with (or will deal with) this bad debtor may know it to be a bad paymaster and refuse to do business with it, will I be risking lawsuit from such disclosure?

Although this may be an understandable reaction to a debtor refusing to pay, you may want to reconsider this approach simply because it may be counter-productive to your interests as a creditor.    First, if he had any intentions of paying you, the chances of that happening will be gone if you start slamming him on social media.   You’ll just make him less, not more, likely to pay you whether it be now or in the future.     At this point, he may just be unable to pay and may even have plans of doing so -   But if you attack him, you make it personal and he’ll never voluntarily pay you.    No, I don’t think that making negative comments on social media is going to be helpful to you, and any satisfaction you get from doing so will be fleeting.

Is there any section of the law that shines light on such matter?

Given that you gave so few facts in your question, this part of your question is far too general for me or anyone else to answer without knowing more facts.    For example, on the paperwork that you have had him sign, did you retain any type of security interest in the property you sold  to him?   Although you may still be able to  collect if you did not perfect a security interest, if you did have a security interest in the property you sold it would change the options that you have to collect and would limit his opportunity to defend himself. Has he filed for protection under the Bankruptcy Code?   That is largely found at Title 11 of the United States Code, but as discussed, without more specific information, that’s not going to help me help you.     I don’t even know if he has filed for bankruptcy protection, but if he has, you need to take action as a creditor whether it be filing a claim, initiating an adversary complaint, or whatever other alternative the facts in this case call for.  Was there any indication that would have made you think that when he purchased the parts from your store, he had no intention of paying the amount of the invoice?  

If I insist on such disclosure approach, do you have any suggestion on making this legally acceptable?

If you insist on that approach, you need to tread softly, and above all, say absolutely nothing that is not absolutely true.    Truth is a defense to any claim he might make for slandering him or defaming him, but if you say anything that is argumentative or casts a bad light on his business, your actions may shift the focus back on you and you could very well end up being the one being sued rather than the one bringing the lawsuit.
Having said all of this, the gist of your question is essentially, “What is your best course of action at the present time?”

If your real goal is to collect your money (rather than just strike back at him because you feel he  defrauded and stole from you when he didn’t pay), depending on what he has done so far that you do not describe in your question, your options are essentially as follows:
You could take the “bull by the horns” so to speak, and bring a lawsuit against him to collect and or return the subject property.     Lawsuits for breach of contract will usually result in an award of costs and attorney fees in addition to what he owes you.    If you get a judgment against him from the court, you will then be able to have the sheriff execute on that judgment and possibly seize any non-exempt property he has, freeze his bank accounts, garnish his wages, and would effectively open up his entire financial history to you.       This might be much more intimidating to him than just bad-mouthing him on Facebook, and it would certainly be more consistent with your ultimately getting paid.     A lawsuit against him may not be as expensive or as difficult as you might think.    In fact, most debtors that are sued don’t even respond to the complaint and the summons and the court enters a default judgment without any trial or hearing.    Insofar as expense goes, the filing fee (paid to the court) will be minimal (only a few hundred dollars, depending on the state you live in, and you might be able to get that fee waived, plus the amount of the filing fee will be ordered to be paid by the defendant), and I wouldn’t charge much more than that either if you wanted me to help you.     

This would be much easier to talk about on the telephone.    I will not charge you just to talk on the phone.   You can call me anytime (including today or on the weekend or at night) at my cell number   915   261-3893

I look forward to speaking with you if you decide to call.

Jack Hall, J.D.
915  261-3893

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Can answer questions about bankruptcy, lawsuits or judgments that have been filed against you. Also can answer questions about tax issues, property that is facing foreclosure, repossession of vehicles, and wage garnishments. 915 261-3893

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Over 30 years experience assisting consumers with lawsuits and bankruptcy matters since graduating from law school.

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Numerous published appellate court opinions; Law review publications; Article on consumer bankruptcy in Black Enterprise magazine; was requested to author a book on consumer bankruptcy by Doubleday Publishers

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Over twenty years of education including law degree (J.D.); masters and bachelors degrees in political science; author of magazine articles related to consumer bankruptcy; hundreds of hours of continuing education legal education and seminars

Past/Present Clients
Have had well over a thousand bankruptcy clients during the past 30 years and have had many clients in civil lawsuits during the same time period

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