The joke for years in my house has been that everything bad financial has to happen to me or my family, just so that I can write about it.
Over the years, that has played out with stolen credit cards, identity theft, lost wallets, improper electronic funds transfers, family members buying famously troubled investments and more.
About the one thing I never experienced was dealing with a deadbeat, either an individual or a company that owed me money and simply refused to pay it. What I have learned over the course of this year – while Consumers Digest magazine has refused to pay for work it published in 2017 – is that trying to collect a debt is more frustrating than those other problems because it is nearly impossible to fix if the debtor won’t do the right thing.
To see why that is – and to decide what you will do if you wind up dealing with a problem debtor – let’s delve into my case (which has evolved from a “situation” into Chuck Jaffe vs. Consumers Digest Publications, Docket #: 1756CV1149 at the Quincy [Mass.] District Court), and the issues individuals face trying to collect from deadbeats.
I started freelance writing as a teenager; over the years it has always been a skill-specific side gig. Freelance work isn’t much different from any situation where you expect a wage in return for your effort.
Every case where payment isn’t made – even those involving loans individuals make to friends or relatives — becomes similar once the problem is that payments aren’t forthcoming. You are out your time and effort — or the dollars put into the deal — and your ability to collect is limited.
Banks and credit-card issuers can afford collection lawyers and eventually can resort to financial thugs to badger leeches and deadbeats, individuals don’t have much leeway.
In cases with small debts, lawyers, agents and collectors don’t jump at one-time cases where the juice isn’t worth the squeeze. The amount a worker or saver will pay hoping to collect can be prohibitive; I know another writer suing Consumers Digest who expects to spend 40 percent of what she is owed on her case.
Fees paid to attorneys are guaranteed; the eventual payoff of the debt isn’t.
Clear contracts help, specifying the terms and conditions that apply, but having a written agreement only helps if the case goes to court. Debtors can ignore written contracts as easily as verbal ones.
Court is the last place I want to be.
I wrote for Consumers Digest in the past; payment wasn’t always prompt, but it always arrived. So I took on one story last fall for the January issue, and then a second story due in the spring; normally, I don’t accept second assignments until the first is been paid, but the work was timely and Consumers Digests’ editors said there was no reason to believe my missing payment was anything but late.
I promised to deliver, and did; I was taught that good journalists don’t accept assignments and leave editors hanging, no matter the reason.
Consumers Digest publisher Randy Weber tried to convince me that payment was coming; in e-mails he acknowledged the debt, promised payment, and volunteered to pay interest at a clip of 1 percent per month. He said in phone calls that this was a temporary cash-flow situation, and promised a plan for partial payments.
The magazine owes me $7,400 for the two pieces, without interest. More than half of that money was owed, contractually, as of last January; the rest was due in mid-July.
I paid roughly 10 percent of what I am owed to hire an attorney and file suit; Consumers Digest has not responded to the court paperwork, and my lawyer expects us to have a default judgment soon.
Having that in my pocket won’t get me paid.
“The biggest surprise for people is that you can be 100 percent in the right, have an easy case to win, sue someone successfully and get your judgment, but you still have to collect and there is no guarantee that will happen,” said credit expert Gerri Detweiler, who believes that Consumers Digest is the one publication that stood her up for payment on a story from over a decade ago. “There is a difference between winning your case and getting paid.”
Linda Sherry, director of national priorities for Consumer Action, added that there are “lots of ways for people and companies that owe money to renege and to hide, or to simply file for bankruptcy, change names, go out of business, move across state lines and more. … You have to be willing to take things to the mat, but you have to be prepared to be frustrated.”
Indeed, that’s where things stand now. Winning a default judgment won’t get me paid. If Weber cared about the reputation of his publication, he never would have allowed it to go this far; there is no reason to believe he simply will settle up, a feeling exacerbated by the knowledge that other writers have filed or threatened cases against Consumers Digest recently.
In a dream world, I get court permission to collect by showing up at the magazine’s office and walking out with computers, office furniture and whatever else I can find that can be sold on eBay to satisfy the debt. In the real world, that’s a lot of effort, halfway across the country, that involves more costs.
Standing on principle is costly and time-consuming, and may not be worth it.
In the real world, this may be the bitter financial jam that I have to choke down, leaving a bad taste in my mouth and a hole in my wallet where payment was supposed to go.
Said Sherry, “What everyone wants in these situations is to get what they are due. What most people get in these cases is something that they can’t really win; they may get a moral victory in court, but they mostly wind up having to choke it down and move on.”
Chuck Jaffe is editor at RagingBull.com; he a nationally syndicated financial columnist and the host of “MoneyLife with Chuck Jaffe” (moneylifeshow.com). He is a long-term investor and does no short-term trading of stocks, options or ETFs. You can reach him at email@example.com.