When a parent leaves owing money

When a Parent Leaves Owing Money: Small Claims Court or Collection Agency?

By Tom Copeland. Published with permission.

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?

Using a "Demand Letter" To Collect from a Parent

If a parent leaves your family child care program owing you money, your first step in trying to collect is to send the parent a "demand letter."

A "demand letter" is a formal request for the money owed you. It shows the parent that you are serious about enforcing your contract. I have talked with child care providers who have received payment after sending such a letter.

Below is a sample "demand letter." Your letter should contain these five elements:

* The dates you cared for the child

* The amount the parent owes you under your contract

* A demand for payment by a specific deadline

* A notice that you will take legal action of the parent doesn't respond by the deadline

* Your signature and the date of your signature

August 1, 20xx

Dear Francene:

On May 1, 20xx you signed a contract with me to provide child care services for your daughter Sally. The contract states that you would pay me $175 per week for care. On July 1, 20xx you informed me that you would be leaving my program. At that time you owed me $175 for the week of June 25-29th.

Our contract also states that you must give me a two-week written notice when you leave my care. You did not do so. Therefore, you also owe me $350 for the two weeks after you gave me notice on July 1st.

This letter is to notify you that you owe me $525 ($175 + $350). If you do not pay me by August 15, 20xx I will have no choice but to take legal action and sue you in small claims court. At that time I will sue you for $525, plus court costs and my expenses.

If you have any questions please contact me. If you cannot afford to pay the entire amount you owe me at once, I will accept a reasonable payment plan.

Sincerely,

Maria Sanchez

Make a copy of your "demand letter" and bring it with you if you go to court. Send your letter by certified mail so you will have proof that the parent received it.

www.tomcopelandblog.com