Client Won’t Pay? From Demand Letter to Lawsuit in MA

Introduction: When Nonpayment Threatens Your Business

Cash flow is the lifeblood of any business. When a customer or client won't pay, it doesn't just sting-it can jeopardize payroll, vendor relationships, and growth plans. At The Law Offices of Michael M. Kaplan, we help Massachusetts businesses and professionals turn unpaid invoices into collected dollars. We bring a practical, step-by-step approach: assess your contract, send a strong demand, and-if needed-file and litigate efficiently so you can get back to running your business.

What We Mean by "Demand Letter to Lawsuit"

A demand letter is a formal written notice that explains what's owed, why it's owed, and what will happen if payment isn't made by a clear deadline. It's often the most cost-effective way to resolve a delinquent account. If that fails, the next step is a civil lawsuit for breach of contract (and, in some cases, additional claims such as unfair or deceptive practices). A successful case leads to a judgment-a court order that the debtor owes you money-followed by collection actions(bank levies, liens, wage garnishment where allowed, or settlement) to actually recover funds.

In Massachusetts, additional rules may apply depending on the facts-for example, consumer protection statutes that require a special 30-day demand or different rules for public entities. A good lawyer will help you choose the right path and avoid missteps.

Why It Matters: Financial, Legal, and Personal Stakes

• Financial impact: Unpaid invoices strain cash flow, trigger late fees with your vendors, and can force tough choices about hiring and inventory.
• Legal exposure: Sloppy follow-up or unclear communications can complicate your case. Missing contractual or statutory deadlines can weaken your position.
• Reputation & relationships: You want to be firm without burning bridges. A professional, documented process preserves options for future business while protecting your rights.
• Time value: The longer an account sits, the harder it is to collect. Evidence goes stale, people move, and assets disappear. Prompt action preserves leverage.

Step-by-Step: From Documentation to Demand to Court

1) Gather and Organize Your Evidence

Before you send anything, assemble a clean file:

• The contract/SOW/estimate(including any change orders).
• Invoices and statements showing amounts and dates due.
• Delivery/acceptance proof(signed work orders, tracking confirmations, photos).
• Communications(emails, texts, messages confirming price, scope, and approvals).
• Payment history(partial payments, bounced checks, promises to pay).
• Damages summary(principal, late fees/interest if your contract allows, and costs).

Tip: If you don't have a written contract, don't panic. Massachusetts recognizes oral contracts and "accounts stated" in many situations. Clear documentation still matters.

2) Evaluate Legal Hooks and Leverage

Read your contract for:

• Payment terms(net 15/30, late interest, installment schedules).
• Attorney's fees clause(whether the loser pays fees-huge leverage).
• Venue/choice of law(where disputes must be filed).
• Personal guaranty(if an owner guaranteed corporate payment).
  
  Consider whether unfair or deceptive practices may be involved (for example, bait-and-switch pricing, knowingly false promises). If so, specialized demand requirements may apply-and potential multiple damages if proven. This can change the negotiation dynamic.

3) Send a Professional, Effective Demand Letter

A strong demand letter is concise, factual, and consequences-oriented-without being hostile. Include:

• Who you are and the relationship (supplier, contractor, professional, etc.).
• What's owed(principal, any contractual interest/fees) with an itemized total.
• Why it's owed(cite contract terms, delivery/acceptance, completion dates).
• A firm deadline(often 10-15 business days) and acceptable payment methods.
• Consequences(lawsuit, interest, fees, prejudgment remedies where available).
• Enclosures(key invoices, contract, proof of completion).
• Delivery by certified mail/email to create a paper trail.

Tone matters. Judges and juries often see demand letters. Professionalism now pays dividends later.

4) Negotiate-But on Your Terms

If the debtor responds, listen and probe: is there a genuine dispute about quality or scope, or is it a stall? Options include:

• Short payment plan(written, with automatic default provisions).
• Discount for prompt wire(if speed and certainty are valuable to you).
• Return of goods/fix punch-list items(if feasible and documented).
• Personal guaranty added to any settlement (added security if the debtor is a company).

Put every deal in writing. If you settle, include a release. If they miss a payment, the agreement should let you enter judgment or resume suit swiftly.

5) File Suit (If Needed), in the Right Court

Choose venue based on amount and issues:

• Small Claims: Lower-value disputes; streamlined but limited discovery.
• District Court or Superior Court: For larger claims, complex disputes, or when you need full discovery and motion practice.
  
  Your complaint typically alleges breach of contract and any related claims (e.g., unjust enrichment, quantum meruit, or unfair practices if supported). You'll serve the defendant, conduct discovery (documents, depositions), and pursue summary judgment or trial.

6) Consider Prejudgment Remedies

If you fear the debtor will hide or dissipate assets, talk to your lawyer about attachment or trustee process(freezing funds in a bank account) with court approval. Used correctly, these tools create immediate leverage and can bring debtors to the table.

7) Win, Then Collect

A judgment is a piece of paper until it's enforced. Collection tools can include:

• Execution(sheriff levies against bank accounts or non-exempt property).
• Wage garnishment(where permitted, subject to limits).
• Liens(on real estate or, for contractors, mechanics' liens if timely).
• Supplementary process(debtor exam to locate assets).
  
  Many cases settle after suit is filed-especially when the debtor realizes you're serious and can document your claim.

Common Scenarios We See

"The Quality Wasn't Good Enough"

The client refuses to pay, claiming substandard work. We compare scope to deliverables, pull approvals and change orders, and-if needed-use a neutral expert. Many of these disputes resolve when the facts are organized and presented clearly.

"Cash Flow Problem-Please Wait 90 Days"

Delays happen, but you need protection. We negotiate a tight payment plan with default triggers, interest, and (ideally) a personal guaranty or consent judgment to ensure you're not left empty-handed.

"We Never Agreed to That"

No signature, no case? Not true. Emails, texts, invoices, and conduct can show a binding agreement. An "account stated" claim can stand when the debtor kept invoices without objection and benefited from the work.

"They're Insolvent or Closing"

We assess collectability early. If the entity is failing, we look for fraudulent transfers, potential claims against owners who commingled funds, and opportunities to secure assets before they vanish.

"Multiple Players: GC, Sub, Owner"

Construction projects breed finger-pointing. We map responsibilities, use lien rights if applicable and timely, and pursue the party with the clearest liability and the deepest pocket.

Roadblocks Clients Often Face

• No written contract: Not fatal, but it makes clarity crucial. Tighten your forms going forward.
• Scope creep & change orders: Verbal changes lead to disputes. Insist on written approvals.
• Informal payment promises:"I'll pay Friday" texts aren't a plan. Convert to a signed agreement.
• Letting it slide: The longer you wait, the weaker your leverage. Act promptly.
• Emotional escalation: Angry emails can backfire. Stay professional; let counsel handle the tough talk.
• Misusing legal labels: Threatening the wrong statute or remedy can hurt credibility. Get guidance.

How We Help (And Why It Matters)

We treat collections and contract disputes like any high-stakes business problem: diagnose fast, apply pressure smartly, and keep costs proportionate to the outcome. Our support includes:

• Up-front case assessment: Contract review, strengths/weaknesses, collectability.
• Demand strategy: Letters tailored to your facts-and the leverage you actually have.
• Negotiation & settlement design: Payment plans, releases, guaranties, consent judgments.
• Litigation & prejudgment remedies: Filing in the right court, using attachments/trustee process when appropriate, and pursuing efficient discovery.
• Judgment enforcement: Bank levies, liens, debtor exams, and creative settlement structures.
• Preventive counseling: Better contracts, clearer change-order procedures, and invoice language that improves collection odds.

Fee structures for business disputes vary by matter type. We'll discuss options up front so there are no surprises-and we'll align the approach with the dollars at stake.

Practical Checklist: Do This Before You Email or Sue

1. Centralize documents: Contract/SOW, invoices, approvals, delivery proof, communications.
2. Calculate the claim: Principal, contractual interest/late fees, and costs.
3. Identify decision-maker: Who can actually authorize payment? Get direct contact info.
4. Pick a deadline: Realistic but firm (e.g., 10-15 business days).
5. Choose the tone: Professional, factual, consequence-aware.
6. Preserve options: Don't threaten remedies you can't or shouldn't use.
7. Call counsel: A 15-minute review can prevent a costly mistake.

Let's Turn "Unpaid" Into "Paid"

If a client won't pay, you don't have to choose between doing nothing and going nuclear. There's a structured path in Massachusetts that starts with a strong demand and-if necessary-moves efficiently to court. The Law Offices of Michael M. Kaplan can help you protect your cash flow, your contracts, and your reputation. Call (508) 473-1161 for a confidential consultation.

We serve businesses and professionals across Worcester, Franklin, Suffolk, Norfolk, Middlesex, and Barnstable Counties from our Milford office. If you're ready to resolve a nonpayment problem, we're ready to help.