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Can You Bring Criminal Charges Against Someone Who Owes You Money?
Can You Bring Criminal Charges Against Someone Who Owes You Money?
01/14/2013

By Cliff Ennico
www.succeedinginyourbusiness.com

"I've got someone who owes my business money.  I've made several efforts to negotiate with this person, but it turns out that he's 'judgment proof' - he has no assets in his personal name.

I know I could just walk away and write this off on my taxes, but I really don't want to do that.  To be frank, I want to punish this person.  He knew when he signed up for my services that he wasn't going to pay my bills, and in my opinion, that's theft.

Can I bring a criminal action against this person?  If I can't, are there any other nasty things I can do to let the world know that this person is a crook that no one should deal with?"
When you run your own business, nothing - and I mean nothing - gets under your skin like a customer who takes your goods and services and then refuses to pay for them. 

Just about every state has a law making "theft of services" a criminal offense.  The definition of "theft of services" varies from state to state, but usually includes:
  • absconding without paying for hotel, restaurant, gas, or other services for which compensation is paid immediately;
  • knowingly securing the performance of a service by deception or threat
  • diverting another's services to the actor's own benefit;
  • knowingly writing a bad check; and
  • holding onto rented property beyond the rental period.
For the charge to stick, though, you usually have to prove that the person "intended" not to pay.  You may be able to prove "intent" if the person signed a written contract, you have made proper demand for payment, and the deadbeat did not have sufficient funds in his bank account to pay the bill at the time he signed your contract.  It will take time, however, let alone the legal fees you may have to incur if your local prosecutor decides that your case isn't worth pursuing at taxpayers' expense.

You should also keep in mind that if you file criminal charges against someone for "theft of services" and the person has a legitimate defense - for example, they were not happy with your work or they just lost their job, which rendered them unable to pay as they thought they would when signing your contract - you may be opening yourself up to a criminal charge of "malicious prosecution" (bringing a criminal case without probable cause). 

To make sure your criminal charge won't backfire, talk to someone in your local prosecutor's office or police department.

When dealing with a deadbeat, you need to keep your emotions under control and remember that "revenge is a dish best served cold."  Here are some other ways you can get justice:

Notify His Credit Bureau
Contact the three major credit reporting agencies (Experian, Equifax and TransUnion) and report your claim.  For instructions, click here. 

"Flame" Him Online
Go to the Better Business Bureau, Yelp, Craigslist, and other online review sites and post a short description of what happened.  Be sure to stick closely to the facts - if you don't, you may be opening yourself up to a lawsuit for libel or slander.  Also, keep your anger at bay:  an online posting that is too emotional makes you look like a crazy person and won't be taken seriously.

Sue Him Anyway
Bring a small claims court action in the county where the deadbeat lives.  Get a judgment, and then write up a press release and send it to every newspaper within 100 miles of the deadbeat's home or place of business.  You may also get an "execution" from the court which might - might - allow you to garnish the deadbeat's wages, put a lien on his house, and otherwise make his life miserable.

Put a Mechanic's Lien on His Property
If you are a contractor and did work on the deadbeat's home, you may be able to put a "mechanic's lien" on his house which will have to be removed when he sells the property or refinances his mortgage.  Talk to a lawyer first though - most states have restrictions on your ability to file a lien, including (in many states) a very, very short statute of limitations.

File an Involuntary Bankruptcy Petition
If the deadbeat is a business that owes you more than $14,425 and doesn't dispute your claim, you may be able to force it into bankruptcy by filing an "involuntary bankruptcy petition." 

Call His Relatives
Don't be afraid to contact the deadbeat's spouse, ex-spouse and other adult relatives.  Especially if the deadbeat is under the age of 30, a call to the deadbeat's parents telling them that you plan to file "theft of services" charges against their child is very likely to generate a quick response.  Again, be sure to stick closely to the facts, and remember that a deadbeat's relatives are not legally required to pay your debt unless they personally guarantee it in writing.


Cliff Ennico
(www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of Small Business Survival Guide, The eBay Seller's Tax and Legal Answer Book and 15 other books.  COPYRIGHT 2013 CLIFFORD R. ENNICO.  Permission granted for use on DrLaura.com.
Tags: Budget, Business, Cliff Ennico, Job, Stay-at-Home Mom, SucceedingInYourBusiness.com, Work from Home
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