Freight Bill Non-Payment: Legal Options for Carriers

Unpaid freight charges 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. We'll go over the legal options that you can take when a freight broker or shipper wo n't pay, as well as what you need to know to protect your company and get the money owed.

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 in the event that 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.

Remarkables to Make:

• Payment policies and deadlines

• Interest or penalties for late payments

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

By understanding your contract, you can find out if the other party broke the terms of it, giving you a solid foundation for any legal action.



2.... File a cargo claim

In some circumstances, the best course of action 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 written notification, including the unpaid amount, the invoice, the delivery confirmation, and any additional documentation.

• Make sure to submit your claim within the deadlines set forth in the contract or industry guidelines.

• Follow up with regular communication to make sure your claim is being processed.

3. Loan the Surety Bond of the Broker

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 most efficient ways to recover unpaid freight bills is when a freight broker refuses to pay you for their surety bond.

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.

• 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 valid.

4..... Take 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 falls within the court's limit, which typically ranges from$ 5, 000 to$ 10, 000, depending on the state, this is Freight Logic LLC 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 claim with your local small claims court.

You will receive a judgment requiring the broker or shipper to pay the owed amount if the court rules in your favor. Although the collection of the money is simple, the court wo n't be able to collect it in its entirety, 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 continues to be unresponsive and the amount owed is significant. 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 experience 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 negotiate the fee (typically a portion of the recovered funds).

6..... File a lawsuit against a breach of 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 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.

• Create 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 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 taking 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 Contact FMCSA to File a Complaint:

• Visit the National Consumer Complaints Database of the FMCSA.

• Provide a complaint describing the broker's failure to pay and any relevant supporting documentation.

• Follow up to see how your complaint is going.

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

8. Preventing 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 lower your chance of dealing with unreliable clients.

Best Ways to Avoid Non-Payment:

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

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

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

You can lessen the chance of having to deal 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 protecting 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 review your contracts closely, 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.