I've found myself in a situation I've never really dealt with before. I used to work for a small startup in Hungary, as a contractor. Unfortunately, the pandemic hit, and in early April, the company laid me off. Payday rolled around and, since I didn't receive my payment for March, I called up my former boss. He admitted that he couldn't pay me, because the company is not doing well financially, and asked me to be patient. Fortunately, I was in a position where I could go a couple months before I needed the money, so I agreed.

That was almost 4 months ago. Since then, he has promised me multiple times that the money is on its way, but I'm still waiting.

The next step is obviously threatening him with legal action, and setting a deadline before I actually get a lawyer involved.

How long should I wait before a lawsuit?

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    Depending on the country's legal system, you may be able to file in small claims court or perhaps a solicitor's letter may be sufficient. – Solar Mike Jul 18 at 17:00
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    The answer to your question is right now. You should have taken legal action when it was one week late. Good luck!! – Fattie Jul 18 at 19:18
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    The question says Hungary and the OP’s profile says Hungary. – mxyzplk - SE stop being evil Jul 18 at 19:21
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    This question should be moved to the Freelancing Stack Exchange freelancing.stackexchange.com – Stephan Branczyk Jul 19 at 3:02

Before 4 months in

You’re already past the window where you should be taking appropriate action. You are owed that money by law in nearly every locality, and it’s not that he “can’t” pay it it’s that he is putting that money into ongoing operations instead.

Contact a local lawyer, they will take a retainer and send the business a threatening letter, which often will get results. Then you can decide if you have further actions that are cost effective (and the lawyer will tell you) - small claims yourself, or there may be governmental orgs or the like you can work with.

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    a fantastic answer, which says it all – Fattie Jul 18 at 19:18
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    He's a contractor, not an employee. – Loren Pechtel Jul 19 at 3:50
  • I bet employment laws in Europe are among the strongest, but OP is a contractor. This could be the reason why the former client is not afraid to delay the payment. – Aksakal Jul 20 at 21:11
  • You can still get a lawyer and still send a letter and still go to court and still follow up with whatever the EU equivalent of the Better Business Bureau is. – mxyzplk - SE stop being evil Jul 21 at 0:30

Hard line is one way to do things as other answers suggest.

I take a different approach which I believe has worked out for me in the long term.

I'm as hard line as anyone normally, but during any natural disaster I write off all bills for clients who are struggling, even if it means I'll struggle a bit as well. After one cyclone I donated every computer I had for sale to clients to get them back up and running and rebuilt their networks gratis. So quite a big loss for me. This has meant I ended up living on noodles and what I could get from my garden at times. But I still have those same clients 10 years later and their loyalty is rock solid. It's something they will never forget.

It's not the best strategy short term, but in terms of customer relations it's huge and I must admit it makes me feel good as well.

Lawsuits against clients are never a good look and their outcome is both uncertain and unknown what effects it could have further down the track, they may be necessary, but sometimes it's best to just put things down to experience. That's something you need to judge for yourself.

Something to think about.

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How long should I wait before a lawsuit?

First, suing them may not even be needed. The simple act of getting an attorney and having them contact the company on your behalf may be enough to get them to pay you.

Second, how long should you wait is a subjective question. My opinion is that you've waited long enough. If it were me, I'd contact an attorney now.

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  • In my experience sending lawyers letters just enriches a lawyer, might be different in other places though. – Kilisi Jul 20 at 22:15

While I'm not going to address your specific question of when to take legal action, I want to mention a highly effective collection method a partner of mine used to use when lines of communication were still open with a delinquent client like this.

Call up your contact and stress that you can no longer afford to wait for this payment, and it must be settled immediately. When they offer the usual "I'll send it right away/tomorrow etc." response, tell them, "no need, I have a meeting nearby in 30 minutes, I'll stop by and pick it up, see you shortly."

Head into their office with a copy of your bills/invoices (if relevant) and pick up the cheque/cash/whatever, be prepared to write a receipt if requested.

This works because they have just agreed they owe you money, and claimed to have the funds available. Avoiding paying you now will mean admitting they lied. Plus, it's harder to give you the run-around face to face, especially if you are on good terms.

It's worth a shot before engaging legally.

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