Had a case where a former employer's checks bounced and I was owed about $3500 in back pay and expenses, including all the software, domain name, etc. for some of his sites were purchased on my personal credit card. Plus I already leased the server for personal use.
I went to settle up with him, wrote a contract up to agree to send him the materials and release copies of all the files/server, and requested that we have the contract noterized. He refused so this is what I did:
Went to the county DA, filed bad check charges. Went to the Chamber of Commerce he was a member of, he got kicked out, went to the better business buro. Turns out I was the third person he did this to in the last year.
He paid me the back pay, but not the expesnes, so I had my attourny (who is a family friend and did this pro bono) draft up a collection notice that stated: "Failure to pay by X will result in the forfeiture of the property".
Well there was no check in the mail today. So I have placed a "This site has an account past due and has been shut down by the administrator" on his page and if there isn't anything by wendesday (allow float time), the domain names I purchased are going up for sale/auction at starting at $500 a piece.
This guy had sold cable discramblers in the past and had a high school education and a blue collar mentality. I have two BA's in German and International Business from a well repected private college. He was lying to his clients about his services and what they could do and I called him on it, plus it had cash flow issues. He always wanted me to invest $10,000 or $12,000 in the business, yet never would show me the books so I refused.
I also should mention that one of my good friends was the former chief of staff for Ashcroft. I took upon myself to call in a favor or two and now this guy is under investigation for Fraud, IRS audit of his business declared the corperation a shale making him personally liable for about $240,000 in backed taxes and other debts and all other kinds of hell and I haven't even mentioned anything to the people I know in the sectary of state's staff yet...
Did I mention I am going back to school this spring and summer part time to finish my third degree in Political Science.
Meanwhile, an old college roomate and I started our own graphics/advertising company. We have two local political campaigns we are going to work for next year by "Donating our time and services" instead of cash.
Yes, I play politics. Its a dirty game, but hell...
Anyway, to your situation, here are some recomendations:
Get everything in writing. It will save your ***.
many coders I know that do free lance work create a "Back door" that if the client doesn't pay, they can go in and tell the program to self destruct. This can be a really bad idea because if its not removed, then it posses a security risk.
Better idea, is to encrypt the code. After they pay, you provide them with the none encrypted source or have a time activate "Key" like in many shareware programs. Yes, this is not the most effective, but it will work.
Just some ideas...