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Something like this happened to me back when I was first getting
started.
In my case, I don't think they ever had any intention of paying me. I
found out later I wasn't the first person they'd done this to -- evidently
they like to work with inexperienced writers. I think they owed me about
$1500.
I suppose I could have and should have taken the company to court. However
I had done things stupidly -- I didn't have a signed contract. The client
had agreed verbally to pay me in royalties. I think I would have had quite
a battle trying to prove what they had promised to pay me. It certainly
would have taken more time and energy than I was willing to spend at the
time. I simply chalked it up to experience and moved on to better things.
In your case, I think it depends on how much money they owe you, and whether
or not you think they ever intended to pay you. At least your client told
you to stop the work. To my mind, this shows some sort of integrity.
Is this a temporary cash flow problem, or are they declaring bankruptcy?
If they're declaring bankruptcy, you may simply be out of luck. However if
it seems that they've just decided not to pay you, talk to a lawyer and find
out what's involved in taking them to court. How much can you prove?
Do you have a signed contract? In the meantime, keep working....