Freight Brokers Owe You? Here’s Your Legal Action Plan
Freight Brokers Owe You? Here’s Your Legal Action Plan
Blog Article
Unpaid freight bills have a significant impact on your company's cash flow and overall financial health. Consistent non-payment can put carriers in a difficult position, despite the fact that 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. Examine 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 in the event that payment is delayed or withheld. Some contracts contain clauses for dispute resolution that specify how disputes involving payments must be resolved, such as through arbitration or mediation.
Important Remarks to Make:
• Payment schedules and deadlines
• Late payment fines or interest
• Arbitration, mediation, or litigation clauses for disputes resolution.
By understanding your contract, you can find out if the other party broke the terms of it, giving you a solid foundation for any legal action.
2.... File a cargo claim
In some circumstances, the logical step may be to file a formal freight claim. To do this, you must notify the broker or shipper in writing that you are requesting payment for the services or goods you have delivered. A freight claim is a formal request for compensation for non-payment, and 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 a 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 rules.
• Keep in touch with us to make sure your claim is being processed.
3.... Loan the Surety Bond of the Broker
According to the Federal Motor Carrier Safety Administration( FMCSA), freight brokers are required to carry a surety bond or trust fund of at least$ 75, 000. In the event that the broker fails to meet its financial obligations, this bond exists to protect carriers and shippers. One of the most efficient ways to recover unpaid freight bills is when a freight broker refuses to pay you for their surety bond.
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 bonding company that holds the broker's surety bond( this information should be provided by the broker or made available via FMCSA).
• Send 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 true.
4..... Bring the case to the court for small claims
You might want to think about bringing a case in small claims court for 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. Take into account hiring a collection 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 negotiating payment for you. Although you'll be required to pay the agency a portion of the recovered amount, this can be a successful method of resolving the problem without going to court.
Working with a Collections Agency:
• Select a company with experience in the transportation or freight sector.
• Provide them with all the necessary paperwork, including your contract with the debtor and unpaid invoices.
• Agree on the collection procedure and bargain the fee (typically a portion of the recovered funds).
6. File a lawsuit against a breach of a contract
You might need to file a lawsuit for contract breach if you want to pay more money or if all other attempts 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 owed.
How to File a Contract Lawsuit in Breach:
• Get in touch with a lawyer who specializes in contract law or transportation law to assess your case and determine your chances of success.
• Prepare all forms of documentation, including contracts, unpaid invoices, delivery documentation, and communication records.
• Begin the legal process by bringing the lawsuit to the appropriate court and going through a trial, discovery, or mediation 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 regulatory bodies
You can report the non-payment to regulatory bodies, such as the FMCSA, in addition to taking legal action. This may not result in immediate Freight Logic LLC 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 Contact FMCSA to File a Complaint:
Visit the FMCSA's National Consumer Complaints Database.
• Provide a complaint describing the broker's failure to pay and any relevant supporting documentation.
• Follow-up to determine the status of your complaint.
By contacting the broker, you help keep them accountable and stop non-payment problems for other carriers in the future.
8. Preventing upcoming non-payment issues
Once the current issue has been resolved, it's crucial to take action to avoid additional non-payment issues in the future. Implementing best practices for arranging payment terms and vetting brokers can lower your chance of dealing with unreliable clients.
Best Ways to Avoid Non-Payment: Best Practices
Before accepting new loads, conduct credit checks on brokers or shippers.
• To ensure faster payments, use freight payment services or factoring companies.
• 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.
Final Thoughts
Legal action may be required to recover the money owed to you when you are faced with unpaid freight bills. Knowing your options is essential to safeguarding your business, whether you decide 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.