Construction Contractors, Suppliers & Designers

Collection of Debts in Vermont

Our firm has over 30 years of extensive experience in helping contractors, suppliers and designers recover delinquent obligations, from debtors anywhere in Vermont.

Key to Success
The key to success in legal debt collection is securing assets or income of the debtor, out of which our client’s obligation can be paid.

Mechanics Lien: One way to do this is via a mechanics lien. Under Vermont law, a mechanics lien can be filed within 180 days after the payment due date for the last stage of work or supplies provided by the creditor. The mechanics lien puts a hold on any sums which the property owner still owes to the contractor with whom the owner had a direct agreement. After another 180 days, the hold expires unless the creditor brings suit in Court and gets a court-ordered attachment of the property.

Our role in pursuing recovery via a mechanics lien is to first determine exactly who owns the property and make sure it is the same party who signed the initial contract. We then prepare the lien document, naming the right parties, and file it in the land records. If the obligation is not resolved by the time the lien is close to expiring, we bring suit to convert the lien into a court-ordered attachment. The ultimate objective is to obtain a judgment in favor of our client, which can be foreclosed against the owner’s property for the sums still owed by the owner.

If Mechanics Lien Not Available: Sometimes, there is nothing still owed by the owner at the time the lien is filed – or the 180 day period has already run - and a mechanics lien can’t be filed at all. In those situations, we examine all of our client’s documentation on the account in question, to determine who the potential debtors are. (Is it just the corporation or LLC that operates the business? Or, have one or more of the principals signed a personal guaranty, or exposed themselves to personal liability in some other way?) Once we identify the debtors, we conduct an investigation of each of them (using a proprietary online database and other methods) to determine their assets and sources of income apart from the job in question. Based on this information, we advise our client as to whether there appears to be a reasonable chance of recovery. If so, we start legal proceedings to obtain a judgment against the debtor(s). If the debtor does not resolve the obligation after being served with the initial suit papers, we then move for judgment. Once judgment is issued, we take legal steps to secure the debtor’s assets and income, in a way which makes them available to pay what is owed to our client.

Fees and Costs
Obviously, doing the work mentioned above, and taking legal action, involves attorney's fees, investigation costs, Court filing fees, and Sheriff's fees.  Vermont has a special law for debts stemming from construction projects, called the "Prompt Pay Act", which allows the creditor to recover these fees and expenses - in addition to interest (at the higher of the rate provided in the contract - if one exists - or 1% per month), plus a penalty of another 1% per month.

Therefore, the judgment we obtain from the Court will include not only the principal amount of the obligation, but also interest, penalty, and the legal fees and costs involved in pursuing the debtor. Then, assuming the debtor has sufficient assets or income which we can secure, all of these amounts are ultimately paid to our client.

Difference Between Collection Agency and Attorney
Some businesses use collection agencies to recover obligations. However, a collection agency is limited to contacting the debtor by mail and phone, to try to persuade him to pay voluntarily. An attorney is not limited to that approach, and can take legal action to obtain payment directly from assets or income of the debtor.