How to Collect What a Parent Owes You Before Going to Small Claims Court

No family child care provider wants to take a parent to court for not paying what is owed them.

It can be stressful, take up a lot of your time, and you may not win - even if your contract is clear that the parent does owe you money.

Going to court should be only considered as a last resort if all other efforts to collect have failed.

Most disputes between parents and providers are resolved outside of a courtroom.

The best way to stay out of court is to require parents to 1) pay at least a week in advance and 2) pay for the last two weeks in advance.  If you don’t already have such language in your contract, add them now. You can make this change just for the new parents that enroll.

Before going to court you may want to take these steps first:

  • Give the parent a deadline and then terminate care. If you are still caring for the child and are having trouble collecting from a parent, give the parent a deadline for paying you and a warning that you will terminate care if they don’t pay. “I need the $400 you owe me by next Monday or you cannot bring your child that day.” For low-income parents you can offer to accept extra weekly payments until they catch up. Putting your foot down is sometimes all it takes for parents to pay up.
  • Consider mediation. Mediation is a voluntary dispute-resolution process that can help you and the parent reach your own solution. Contact your local legal aid society to see if there is a mediation center near you.
  • Offer a compromise. You may want to offer to accept less money than the parent owes you as a compromise to avoid going to court. Tell the parent you are willing to accept something less. “You owe me $400. I will accept $300 instead if you pay me by Monday, or pay me $100 a week for the next three weeks. If you don’t agree to this I will sue you for $400, plus court costs.”
  • Send a demand letter. If the above efforts have failed, send the parent a “demand letter.” In this letter, tell the parent how much she owes. Make a copy of the section of your contract that indicates what she owes (two-week notice, for example). Give the parent a deadline of when to pay. Indicate whether or not you will accept weekly/monthly payments or whether you will accept a lower amount to settle. Tell the parent if they don’t contact you by the deadline you will sue them for the amount they owe you, plus court costs. You want the parent to know that they may have to pay you more money if they don't settle now.

Sometimes these steps will work and sometimes they won’t. I believe it’s better to try them before taking the final step of going to court.  You can decide not to take the parent to court even after sending a “demand letter.”  

Some providers use collection agencies, rather than going to court. A collection agency can write letters on your behalf and call the parent. But, you will pay a fee if they do collect money. To find a collection agency, Google, “Collection Agency.”

Remember, if the parents are paying you in advance, they can’t leave owing you money!

How do you handle parents who owe you money? Leave a comment!

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Tom Copeland

I've been the nation's leading trainer, author, and advocate on the business of family child care since 1981. I'm a licensed attorney and have presented hundreds of business workshops for family child care providers across the country. I answer thousands of calls and emails each year to help providers, tax professionals and trainers understand complex business and tax issues. Call me at 651-280-5991. Email me at Visit me on Facebook. From 1981 to 2009 I worked at Resources for Child Caring in Minnesota (now called Think Small), where I was director of Redleaf National Institute for 15 years. I've written nine books on the business of family child care published by Redleaf Press, a division of Resources for Child Caring. I was on the board of directors of First Children's Finance, a non-profit organization providing low interest loans and consulting and technical assistance to help family child care providers suceed as a business. They operate in Minnesota, Iowa, Michigan, North and South Dakota, Kansas, Missouri, and Texas. Here are some YouTube videos of me talking about my work with this organization and the business of family child care. I graduated from Macalester College (BA) in 1972 and from William Mitchell College of Law (JD) in 1980. I live in St. Paul, Minnesota with my wife Diane and two cats, Duke and Ella.