Will your remodeling contractor go bankrupt?

The last thing you want is for a contractor to go out of business in the middle of your remodeling job. 

Imagine it: Your old kitchen has been torn out and hauled to the dump or recycled. The crews have just begun to run new plumbing lines when, one day, they stop coming. You call the office and the phone goes to the answering machine. You go to the office and it's closed up. 

As you eventually find out, your contractor was so far in debt that he or she had to close the doors.

Could this happen? It could happen and it has happened. You don't want this to happen to you.

However, in this uneasy economy, the chances are greater than ever that a company that is here today will be gone tomorrow. 

Here are some questions to ask BEFORE you hire a contractor: 

1. Is this contractor highly ethical, a pillar of the community, with an impeccable record? A highly ethical contractor seems more likely to finish a job, even when facing financial calamity, than is a fly-by-night contractor who just happened to give you the lowest bid. (Read here about how an ethical contractor goes out of business.)

2. Is the contractor willing to supply credit references from suppliers, such as lumber stores, sheetrock vendors, and others so that you can be confident that he/she is financially solvent? (Advice from the Preservation Resource Center in New Orleans)

3. Is the contractor willing to give you bank references so you can call to check on credit worthiness? (Advice from Roofer's Coffee Shop)

You can also order a credit history from Contractor Check, which is associated with Experian, for any contractor you are thinking of hiring. You can get unlimited histories for $30 for a month or get one check for $13. I tried out this service and checked up on some of the contractors I'd been writing about for years. I was shocked at what I discovered. Read my story here.

And it goes without saying — but I'll say it anyway — the contractor you hire should be licensed, bonded and insured.

Any more ideas?

1 Comment on Will your remodeling contractor go bankrupt?

  1. slc construction

    This is definitely something to consider when starting a poject, especially if the project requires a big investment in materials and labor. If the contractors have been in business for more than 10 years, it is probably safe.