What Legal Action Can You Take for Unpaid Freight Bills?
What Legal Action Can You Take for Unpaid Freight Bills?
Blog Article
Unpaid freight bills can have a significant impact on your company's cash flow and overall financial health. Consistent non-payment can put carriers in a difficult position, even though payment delays are common. You may need to look into legal options if you have exhausted all of the informal means of collecting your money. What should you know in order to protect your business and recover the money owed, and what legal options are available to you when a freight broker or shipper refuses to pay.
1. Review your freight contract
Examining the freight contract you have with the broker or shipper is the first step before taking any legal action. The contract will list the terms, conditions, and remedies you may have if payment is delayed or withheld. Some contracts contain dispute resolution clauses that specify how disputes involving payment must be resolved, such as through arbitration or mediation.
Remarkables to Make:
• Payment policies and deadlines
• Late payment fines or interest
• Arbitration, mediation, or litigation clauses for disputes resolution.
By understanding your contract, you can determine whether the other party's terms have been broken, giving you a solid foundation for any legal action.
2. File a claim for freight.
In some circumstances, the best course of action may be to file a formal freight claim. For this, you must inform the broker or shipper in writing that you are requesting payment for the services or goods you have provided. A freight claim is a formal request for compensation for non-payment; it can also be used if the dispute involves lost or damaged goods or other transport-related disputes.
How to File a Freight Claim
• Provide the broker/shipper with written notification, including the unpaid amount, the invoice, the delivery confirmation, and any additional information.
• Make sure to submit your claim within the deadlines set forth in the contract or industry guidelines.
• Follow up with regular communication to make sure your claim is being processed.
3. Loan the Broker's Surety Bond
According to the Federal Motor Carrier Safety Administration( FMCSA), freight brokers are required to carry a surety bond or trust fund worth at least$ 75, 000. In the event that the broker fails to fulfill its financial obligations, this bond exists to protect the carriers and shippers. One of the most efficient ways to recover unpaid freight bills is if a freight broker is not paying you. Claiming against their surety bond is one of the best ways to do this.
How to File a Surety Bond Claim
• Gather pertinent paperwork, including your broker's contract with you and the unpaid invoice.
• Get in touch with the bond holding company for the broker's surety bond( this information should be provided by the broker or made available via FMCSA).
• Submit the necessary paperwork to the bonding company in order to file your claim.
The bond company will pay you for the unpaid amount, up to the bond's maximum, if your claim is legitimate.
4..... Bring the case to the court for small claims
You might want to file a case in small claims court if you want to collect smaller unpaid amounts. When the amount owed falls within the court's limit, which typically ranges from$ 5, 000 to$ 10, 000, depending on the state, this is a relatively low-cost option for recovering freight bills.
How to File a Small Claims Court Case:
• Check the state's small claims court system to see if your claim qualifies.
• Create documentation, including the contract, the unpaid invoices, and communications with the broker or shipper.
• Attend the hearing where you present your case and file the claim with your neighborhood small claims court.
You will receive a judgment requiring the broker or shipper to pay the owed amount if the court rules in your favor. Although the collection of the money is simple, the court wo n't be able to collect it in its entirety, so this process may not guarantee immediate payment.
5. Consider Using a Collections Agency
Employing a collections agency may be a wise choice if the broker or shipper continues to be unresponsive and the amount owed is substantial. Collections agencies have a history of recovering unpaid debts, and they can handle the process of contacting the debtor and bargaining terms with you. Although you'll have to pay the agency a portion of the recovered amount, this can be a successful way to resolve the problem without going to court.
How to Work with a Collections Agency:
• Select a company with expertise in the transportation or freight sector.
• Provide them with all the necessary paperwork, including your agreement with the debtor and unpaid invoices.
• Agree on the collection procedure and negotiate the fee (typically a portion of the recovered Freight Logic LLC funds).
6. File a lawsuit against a breach of a contract
You may need to file a lawsuit for contract breach if you want to pay more money or if all other attempts have failed. Although this legal process is more formal and time-consuming, it may be required if the broker or shipper refuses to pay significant sums of money. This lawsuit may be handled in federal court or civil court depending on the court's jurisdiction and the amount due.
How to File a Contract Lawsuit in Breach:
• Get in touch with a lawyer who specializes in contract or transportation law to assess your case and assess your chances of success.
• Prepare all forms of documentation, including contracts, unpaid invoices, delivery documentation, and communication records.
• File the lawsuit in the appropriate court, go through the legal process, go through discovery, or go to trial, if necessary;
Although legal action can cost a lot, it might be the only option for recovering large amounts of unpaid bills.
7. Report the shipper or broker to the authorities responsible for regulation
You can report the non-payment to regulatory bodies, such as the FMCSA, in addition to going to court for legal action. This may not result in immediate payment, but it could lead to the broker's license being voided or revoked, which could prevent them from engaging in similar practices with other companies.
How to File a Complaint with the FMCSA:
• Visit the National Consumer Complaints Database of the FMCSA.
• Include a complaint about the broker's failure to pay, as well as any relevant supporting documentation.
• Follow up to see how your complaint is going.
By disclosing the broker, you help keep them accountable and stop non-payment issues for other carriers in the future.
8. Prevent upcoming non-payment issues.
Once the current issue has been resolved, it's crucial to take action to avoid additional non-payment issues. Implementing best practices for arranging payment terms and vetting brokers can lessen your chance of dealing with unreliable clients.
Best Ways to Avoid Non-Payment: Best Practices
• Before accepting new loads, check the credit of brokers or shippers.
• To ensure faster payments, use freight payment services or factoring firms.
• Establish clear payment terms, penalties for late payments, and dispute resolution procedures.
You can lessen the chance of dealing with unpaid freight bills by managing your relationships with brokers and shippers.
Conclusion
Legal action may be required to pay back the money owed to you when faced with unpaid freight bills. Knowing your options is essential to protecting your business, whether you choose to file a claim against a surety bond, go to small claims court, hire a collection agency, or file a lawsuit. Always go over your agreements carefully, keep track of all transactions, and follow the appropriate procedures to quickly recover payment. You can protect your business from upcoming non-payment issues by taking the right legal action and putting preventive measures in place.