Legal Remedies for Freight Bill Non-Payment

Unpaid freight bills can have a significant impact on your company's cash flow and overall financial health. Consistent non-payment can put carriers in a difficult position, even though 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, in this guide.

1. Review 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 if payment is delayed or withheld. Some contracts contain dispute resolution clauses that specify how disputes involving payments must be resolved, such as through arbitration or mediation.

Important Remarks to Make:

• Payment policies and deadlines

• Late payment fines or interest

• Arbitration, mediation, or litigation clauses for disputes to be resolved.

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



2.... File a cargo claim

In some circumstances, the logical next 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 written notification, including the unpaid amount, the invoice, the delivery confirmation, and any additional information.

• Be 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 worth 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 if a freight broker is not paying you. Claiming against their surety bond is one of the best ways to do this.

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 legitimate.

4. Bring the case to the Small Claims Court.

You might want to think about bringing a case in small claims court if you want to pay smaller unpaid amounts. When the amount owed is 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 Case in a Small Claims Court

• 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 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. Consider Using a Collections 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 way to resolve the problem without going to court.

How to Work with a Collections Agency:

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

• Provide them with all the necessary paperwork, including your agreement with the debtor and unpaid invoices.

• Agree on the collection procedure and bargain the fee (typically a percentage 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 is declining 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 due.

How to File a Contract Lawsuit in Breach:

• Get in touch with a lawyer who specializes in contract or transportation law Freight Logic LLC to assess your case and assess your chances of success.

• Create all forms of documentation, including contracts, unpaid invoices, delivery proof, 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.

Legal action may be expensive, but it might be the only option for recovering significant 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 going to court for legal action. This may not result in immediate 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 File a Complaint with the FMCSA:

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 see how your complaint is progressing.

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

8. Prevent upcoming non-payment issues.

Once the current situation has been resolved, it's crucial to take action to avoid additional non-payment issues. 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, 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 reduce the chance of dealing with unpaid freight bills by managing your relationships with brokers and shippers.

Conclusion

Legal action may be required to recover 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.