How to Take Legal Action for Unpaid Freight Bills

Unpaid freight bills can have a significant impact on your company's cash flow and overall financial health. Although payment delays are common, inconsistent non-payment can put carriers in a difficult position. You may need to look into legal options if you've 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, in this guide.

1. Examine Your Freight Contract

Reviewing the freight contract you have with the broker or shipper is the first step before taking 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.

Remarkables to Make During the Review

• Payment policies and deadlines

• Late payment fines or interest

• Arbitration, mediation, or litigation clauses for disputes resolution.

By understanding your contract, you can determine whether the other party's terms have been broken, giving you a solid foundation for any legal action.



2.... File a claim for freight.

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 provided. A freight claim can also be used if the dispute involves damaged goods, lost cargo, or other transportation-related disputes. It is a formal request for compensation for non-payment.

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 Broker's Surety Bond

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 fulfill its financial obligations, this bond exists to protect carriers and shippers. One of the best ways to recover unpaid freight bills is when a freight broker refuses to pay you for their surety bond.

How to File a Claim for Surety Bond:

• 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.

• Submit 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 legitimate.

4. Bring the case to the Small Claims Court.

You might want to file a case in small claims court if you want to collect 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 make sure your claim qualifies.

• Create documentation, including the contract, the unpaid invoices, and communications with the broker or shipper.

• Attend the hearing to present your case and file the Freight Logic LLC claim with your local small claims court.

You will receive a judgment for the broker or shipper if the court rules in your favor and demands payment of the owed sum. Although the collection of the money is simple, the court wo n't handle the actual collection of the money, 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 is unwilling to pay the owed amount because of how much it is owed. 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 have to pay the agency a portion of the recovered amount, this can be a successful method of resolving the problem without going to court.

How to Work with a Collections Agency

• Select a company with expertise in the freight or logistics sector.

• Provide them with all the necessary paperwork, such as 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 country and the amount owed.

How to File a Breach of Contract Lawsuit

• 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.

• File the lawsuit in the appropriate court, go through the legal process, go through discovery, or go to trial, 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 authorities responsible for regulation

You can report the non-payment to regulatory bodies, such as the FMCSA, in addition to going to court for legal action. This may not result in immediate payment, but it may lead to the broker's license being suspended or revoked, which could prevent them from engaging in similar practices with other companies.

How to File a Complaint with FMCSA:

Visit the FMCSA's National Consumer Complaints Database.

• Include a complaint about the broker's failure to pay, as well as any relevant supporting documentation.

• Follow-up to determine the status of your complaint.

By disclosing the broker, you help keep them accountable and stop non-payment issues for other carriers in the future.

8. Prevent 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 lessen your chance of dealing with unreliable clients.

Best Techniques for Preventing Non-Payment:

• Before accepting new loads, check the credit of brokers or shippers.

• To ensure faster payments, use freight payment services or factoring firms.

• Establish clear payment terms, penalties for late payments, and dispute resolution procedures for contracts.

You can reduce the chance of dealing with unpaid freight bills by managing your relationships with brokers and shippers.

What is the conclusion?

Legal action may be required to pay back the money owed to you when 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. By taking the appropriate legal action and putting preventive measures in place, you can protect your company from upcoming non-payment issues.