Legal Question in Credit and Debt Law in Pennsylvania

After he files bankruptcy, you should get notice by mail, file a proof of claim form, form on court's website and mail it to the court for filing. You generally don't have to go to court. If there is money in the estate they will send you a check, if no money you may not see anything back.

Well, has he filed for bankruptcy or not? If he has filed for bankruptcy, chances are you will not get your money back. You need to see if he has filed bankruptcy because if he has then it is illegal to try and collect from him. In such case, you would file a proof of claim with the bankruptcy court (for a chapter 11 or 13 or chapter 7 with assets). Whether you get some money would then depend on whether there are assets and where your claim sits in order of priority.

You did have a contract, albeit verbal and not written. You partly performed by paying (which was bad) and he did not provide the service or product. Problem is you have waited till now.

The statute of limitations is 3 or 4 years in NC (depends on if the Uniform Commercial Code applies; the UCC applies if the contract was for a product and contracts over $500 should be in writing and signed). The statute starts to run from the time breach occurred, which is non-performance of service. Not when you demanded your money back necessarily. If the statute has expired you might be able to get it re-started, but that would require him to acknowledge the debt in writing and make a partial payment on it. From what you have written, that does not seem very likely.

Small claims court covers claims of up to $10,000. I don't see how you can avoid court here (absent a bankruptcy). You would have to be here to file (although the forms are online and you could file by mail).. But you would still have to appear at a hearing. Even if you got a lawyer, the lawyer cannot testify for you. You have to do that.

The other issue is collectability. While getting a judgment has value to it, how are you going to enforce it? Just because you get a judgment does not mean you are going to get paid. A judgment is just a piece of paper filed at the court which says someone owes you money. Whether you get paid or not depends on if he or the business owns assets and if they can be seized or not.

You mention a business. Is the "friend" a business corporation or an LLC? Or a sole proprietor? If a business/LLC, what does the business own or do? If a sole proprietor, what does the owner own and how is it titled?

How much is owed? Under $10,000? And you don't want to go to court so how do you plan on collecting? Are you going to hire a lawyer to send the friend a collection letter? What if he calls your bluff and still does not pay? Are you prepared to pursue legal action? If not, then there is not much point to a letter.

You have not thought this through. If you would like to discuss the specifics of your situation in greater detail, please contact me at [email protected]. Email consults are free.

Barring that, I would find out what county he lives in in North Carolina and contact the bankruptcy court handling that area (we have 3 districts in NC - Eastern, Middle and Western - Eastern half includes cities like Raleigh, Fayetteville and Wilmington; Greensboro is included in the middle and the western district includes cities like Asheville and Charlotte). I would find out whether he or his business has filed bankruptcy and what kind.

If no bankruptcy has been filed and there is no statute of limitations issue, then you can think about suing to collect the debt. The forms for a small claims complaint can be accessed online at www.nccourts.org; you would need the small claims complaint and summons if this is under $10,000. If it is over that amount, then I suggest that you get a collection attorney to assist you.

Getting a judgment is the easy part; its the collecting that is difficult. There is no wage garnishment in NC. As I said, there is value to getting a judgment. Judgments last for 10 years and can be renewed for another 10. Judgments will be listed on his credit report (if he is personally liable) and will prevent him from obtaining credit or refinancing a mortgage so if he cares about this, that may be an incentive for him to pay.

Hope this helps.