Reining in the bad contractor

What do you do when you feel screwed by a contractor – especially when you think you are such a good, educated consumer? I had to eat crow. I hired a bad company. I did not do enough research. We all do such things, so I was hoping this story might illustrate what you can do when you do get into a bad situation with a bad contractor.
Our furnace broke in the middle of the night. It was nearly 20 years old. We were not really that surprised, just mad for not replacing it earlier. We got out the Yellow pages and called several companies. The first call back was a guy I knew as a kid. So we hired him to install the new furnace without doing any background checks.
Eight months later, on one of the coldest nights of the winter, it broke. At first, I was in denial. Then I flipped out, thinking my poor little daughter would freeze. So I screamed to my husband to fix it (like he could actually fix a broken furnace) and ran upstairs and covered our daughter under multiple blankets. I knew she would not freeze in a few hours. It was still 55 degrees inside the house. But I was angry. I paid dearly for my furnace, and I expected it to work. I expected peace of mind. I paid for it.
After multiple calls to the 24-hour line, screaming matches with the company’s owner, and repeated visits by an inept furnace repair guy from that very company (who assured me this problem was an Act of God since the venting pipe had frozen, forcing the furnace to just stop), I became an educated consumer once again. (By the way, after the repair guy fixed the problem, it broke again that very night.)
I needed help. I had to resolve this situation. I wanted to force him to fix this adequately without additional cost to us. But I wasn’t so sure that could happen. So I called a competitor company – Air Master of Berkley, Michigan – and started asking questions. I wanted to hire him to fix it. This is when I discovered the contractor had not pulled a permit, nor had he properly lined the fireplace. The owner came out to my home, at no cost, and inspected my furnace. The piping was installed improperly. We were lucky it froze. It could have exploded. There were other things. The work was sloppy. The humidifier was not installed.
The permits (air and furnace) could have been a few hundred bucks, and the liner for the chimney was $400. The competitor said he would fix it. But he thought I should try to get the other guy to do it without any cost. Now I had the upper hand.
I wrote a letter, telling the company I had hired that my unit was inspected. I outlined what needed to be fixed and highlighted the phrase, “at no cost to me.” I encouraged them to get the permits required at City Hall. I knew they would understand I meant business. They are required by law to get permits. If they did not, I would turn them in.
I said they had two weeks to fix the furnace, line the fireplace and pull the permit. I got a call the next day from a very pleasant company owner. They got permits and fixed my furnace. I had it inspected. Next time I need something, I am calling Air Master. I will never do business with the other company again.