Comment by b8
8 hours ago
There's not any incentives to pay you when they're in China and there's no legal recourse from the US. Even in the US suing is often times not worth it economically and getting someone to pay after a win is painful too if they don't just file bankruptcy. Escrow or upfront only is the best way to go.
The company was California-based, they were offering services in China. At least, that was my read. The contractor was also in California.
Honestly, this seems to be bad advice from their recovery services. Suing is 100% recommended here. There are plenty of lawyers that will work on a pro rata basis for account recovery in California. Sure, you lose a portion of your 35k; but you get more than you would have letting them get away with paying zero.
There's also laws in place to keep companies from "closing up shop" and opening in a new entity. It doesn't necessarily erase your debt (it can, but only in rare circumstances). And, even if they do get around it, it keeps them from pulling the same shenanigans going forward, in the state.
Not saying I know better but this contradicts what I heard from multiple collections companies with in-house legal - they all said suing would not be worth the ~$2,500 upfront fees and that the debtor would just vanish. The debt still exists so I'd love to think otherwise! Feel free to HMU if you have a specific lawyer/practice in mind ;
The debtor can't "vanish", they are either an individual or an entity with registered individuals attached to it. Obviously, their structure matters a little bit along with where they are incorporated. But if they are incorporated in California, their debt is 95% recoverable if they want to continue doing business in any way. As an individual you can go after garnishment and other relief. As an entity, it's similar but to their company/corporate holdings.
If they try to dissolve and create another business that operates in the same sphere/as a successor or with the same management team; the debt doesn't disappear, you just prosecute the new entity. With an added cherry of potential criminal prosecution, if they're particularly egregious about it.
People can 100% get around paying, that happens. But the judgement will remain on their record. This will make reincorporation difficult as well as just acting as a warning to future partners that do basic due diligence.
No one's saying it's easy to get the money back, but rolling over probably is the least desirable outcome (and probably why they've acted this way with so many people).
As to your collection firms, I can't speak to it. Maybe your situation is more complicated (e.g. registered entity out of state, unclear contract terms, etc) or they just don't want to go through with the hassle of doing more than they were hired to do (send nag letters and hope for easy turnover).
In the future, you can use it as a learning experience. Keep your deliverables under the small claims limit, do metered payouts, etc.
This was a California company and contract, but your comment does apply to their situation with their client