Client Won't Pay: Freelancer Collection Rights FAQ

An effective demand letter to a non-paying client should include several key elements:

• Your name and contact information
• The client's name and address
• The date of the letter
• A clear subject line referencing the unpaid invoice
• A description of the services you provided with dates
• The original invoice amount and date
• Any payments already made
• The total amount currently owed including any late fees or interest if specified in your contract
• A clear deadline for payment (typically 10-14 days)
• Your preferred payment methods
• A statement that you will pursue legal action if payment is not received
• Your signature

Keep the tone professional but firm. Reference your original contract or agreement if you have one. Send the letter via certified mail with return receipt requested to create proof of delivery.

Small claims court limits vary significantly by state. Some common limits include:

• California: $12,500 for individuals, $6,250 for businesses
• New York: $10,000 in most courts, $5,000 in town and village courts
• Texas: $20,000
• Florida: $8,000
• Illinois: $10,000
• Pennsylvania: $12,000
• Ohio: $6,000
• Georgia: $15,000
• Michigan: $6,500
• Washington: $10,000
• Colorado: $7,500
• Arizona: $3,500
• Massachusetts: $7,000
• Delaware: $25,000

Some states have increased their limits recently, so verify the current limit in your jurisdiction before filing. If your claim exceeds the small claims limit, you may need to file in a higher court.

To file a small claims case against a non-paying client, follow these general steps:

First, determine the correct court by checking where the contract was signed, where the work was performed, or where the defendant resides or does business.

Second, obtain the proper forms from the court clerk's office or the court's website.

Third, complete the complaint form with your information, the defendant's information, the amount owed, and a brief description of why the money is owed.

Fourth, pay the filing fee, which typically ranges from $30 to $100 depending on the claim amount and jurisdiction.

Fifth, serve the defendant according to your state's rules, which may include personal service, certified mail, or other approved methods.

Sixth, gather your evidence including the contract, invoices, proof of work completed, communications, and any other relevant documents.

Finally, appear at your scheduled hearing prepared to present your case clearly and concisely.

Yes, you can charge interest on unpaid invoices, but the rules vary by state and depend on your contract terms. If your contract specifies an interest rate for late payments, that rate generally applies as long as it does not exceed your state's usury limits.

If your contract is silent on interest, you may be limited to the statutory prejudgment interest rate, which varies by state. Common statutory rates include:

• California: 10% per year
• New York: 9% per year
• Texas: 6% per year
• Florida: Varies based on federal discount rate
• Illinois: 5% per year

Some states allow higher rates for commercial transactions. To enforce interest charges, include clear payment terms in your contracts specifying the interest rate, when it begins accruing, and how it is calculated. Courts are more likely to award interest when it is clearly documented in the original agreement.

A mechanic's lien is a legal claim against property that secures payment for work performed or materials supplied to improve that property. While traditionally used by construction contractors, mechanic's liens can sometimes be available to other professionals depending on the state and the nature of the work.

In most states, mechanic's liens are limited to work that improves real property, such as:

• Construction and renovation
• Landscaping
• Architectural services
• Engineering work

Freelancers providing purely digital services like graphic design, writing, or web development typically cannot file mechanic's liens. However, if your work involves physical improvements to property, you may qualify.

Requirements vary by state but generally include providing preliminary notice to the property owner, completing the work within a specific timeframe, and filing the lien with the county recorder within strict deadlines. Consult your state's specific lien laws or an attorney to determine if this remedy is available for your situation.

Using a collection agency can be an effective option for recovering unpaid invoices, but it comes with trade-offs. Collection agencies typically charge between 25% to 50% of the amount collected, with higher percentages for older or smaller debts.

Advantages:

• Frees up your time to focus on your business
• Professional collection techniques
• Ability to report debts to credit bureaus

Disadvantages:

• Losing a significant portion of what you recover
• Potential damage to client relationships
• Possibility that the agency may not successfully collect

Consider using a collection agency when the debt is at least 90 days overdue, your own collection efforts have failed, you lack time to pursue the matter yourself, or the amount is too small for legal action but significant enough to matter. Before hiring an agency, verify they are licensed in your state and understand their fee structure.

To successfully prove your case in a freelance payment dispute, gather and organize the following evidence:

• Your written contract or agreement, including any amendments or change orders
• All invoices sent to the client with dates and amounts
• Proof of services rendered, such as deliverables, files, drafts, or time logs
• All communications with the client including emails, text messages, and written correspondence
• Proof of invoice delivery
• Any partial payments received
• Documentation of the client's acceptance or approval of your work
• Witness statements if others can verify your work or the agreement
• Any written acknowledgment of the debt by the client

Organize your evidence chronologically and prepare copies for the court and the defendant. Practice presenting your case clearly and concisely, as small claims court hearings are typically brief. Focus on the essential facts: what was agreed, what you delivered, what was owed, and what remains unpaid.

The statute of limitations for collecting unpaid invoices varies by state and whether you have a written or oral contract. For written contracts, common limitation periods are:

• California: 4 years
• New York: 6 years
• Texas: 4 years
• Florida: 5 years
• Illinois: 10 years
• Most other states: 3 to 10 years

For oral contracts or invoices without a formal written agreement, the limitation period is typically shorter, often 2 to 4 years depending on the state.

The clock usually begins running from the date payment was due or from the date of the last payment if partial payments were made. Once the statute of limitations expires, you lose your legal right to sue for the debt, though you may still attempt informal collection. To protect yourself, pursue unpaid invoices promptly.

Whether you can withhold deliverables depends on your contract terms and the nature of your work. If your contract specifies that ownership or delivery of work product is contingent on payment, you generally have the right to withhold until paid. This is sometimes called a possessory lien or artisan's lien for creative work.

However, several considerations apply:

• Review your contract carefully, as some agreements transfer ownership upon creation rather than payment
• Consider whether withholding could expose you to a breach of contract claim
• Ensure you have not already delivered the final work
• Be aware that withholding may escalate the dispute

Best practices include structuring contracts to require milestone payments before delivering work, retaining low-resolution versions or watermarked proofs until final payment, and including clear language stating that ownership transfers only upon receipt of full payment. If you decide to withhold, communicate professionally in writing that work will be released upon receipt of payment.

Several states and cities have enacted Freelance Worker Protection laws that provide significant payment protections:

New York City's Freelance Isn't Free Act requires written contracts for work over $800, timely payment within 30 days of completion, and protection against retaliation. It allows freelancers to recover double damages, attorney's fees, and injunctive relief.

California's Freelance Worker Protection Act (effective 2025) requires written contracts for work over $250, payment by the agreed date or within 30 days, and provides for double damages and attorney's fees.

Illinois's Freelance Worker Protection Act requires written contracts for work over $500 and payment within 30 days.

These laws typically require the hiring party to provide a written contract, pay by the agreed date, and prohibit retaliation for exercising rights under the law. If you work in a jurisdiction with freelance protection laws, document your contracts and payment timelines carefully to take advantage of these enhanced protections.