If a client owes us money but they are located in another state, where do we sue?
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If a client owes us money but they are located in another state, where do we sue?
This customer owes us quite a bit of money. We have been trying to work with him so that he can pay us back. He has made no payments to us in over 9 months. Some invoices are over 1 year old. Should we try a collections agency first (which I do not think will get results) or take him to court. Also, will the case have to be in MD or our home state of AL?
Asked on September 7, 2011 under Bankruptcy Law, Alabama
Answers:
S.L,. Member, California Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
A lawsuit can be filed where the plaintiff lives or where the defendant lives or where the claim arose. You could file your lawsuit in either AL or MD. For convenience purposes such as filing documents with the court and court appearances, you should file in AL where you live.
If you go to a collection agency instead of filing a lawsuit, the collection agency will keep a substantial percentage of the amount it recovers. For that reason, you would be better off to file a lawsuit instead of going to a collection agency.
You will need to file your lawsuit prior to the expiration of the applicable statute of limitations or you will lose your rights forever in the matter. If you are getting near the statute of limitations and I don't think you are at this point, but if you were near the statute of limitations in one state or if the statute of limitations had expired in one state, then it would be advisable to file the lawsuit in the other state.
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