Small Claims Pros and Cons

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March 7, 2014 by sandyonyourside

If you own your own business, small claims court can be your best friend.  It’s really the only way to get a legal order of payment against people who owe you small amounts — anywhere from a few dollars to a few thousand.

And small claims court isn’t just for small businesses--it’s for everyone.  As long as someone owes you money within the “jurisdictional amount” (the maximum amount of damages you are allowed to claim, which varies from state to state), then you’re good to go.

Or are you?  Small claims court has many advantages over regular civil court, as we’ll see.  But before you file, you’ll want to be fully informed about what small claims court can and cannot do.

So here’s a quick rundown of pros and cons, followed by a warning about small claims lawyers. 

Pros

*     Small claims court is inexpensive.  The filing fee is much lower than in regular civil court, and you don’t have to pay a process server to serve the complaint.

*     It’s also quick.  You get a hearing soon after you file your small claim, and your case will be decided either immediately after the hearing or within a few weeks. No waiting months or years just to get before a judge.

*     You don’t need a lawyer in small claims court.  The process is designed to make it easy for people to represent themselves.  In fact, some states say you can’t have a lawyer in small claims court.

*     Small claims hearings are informal: no arcane legal procedures and evidentiary technicalities.  Of course, you will still be required to prove your case with contracts, invoices, witnesses, pictures of damages, etc.

*     You may have a choice of where to bring your small claim.  You may, for instance, be able to file your complaint in the court where you live or have a place of business, or where the defendant (the person you are suing) lives or has a place of business.  You can call the clerk’s office in these courts to figure out where your claim is likely to be heard soonest.

Cons

*      On the downside, there are some special rules about suing a corporation.  You  must make sure you have the exact corporate name on the complaint, and that you send a copy of the complaint to the right corporate address.  This can be tricky with companies that have franchises and with huge multinational corporations. The Corporations Division of your state Secretary of State’s office can assist you in obtaining the correct information.

*     The amount of damages you can be awarded is limited by the jurisdictional amount.  If someone owes you $10,000 and you sue him in small claims court where the jurisdictional amount is $5,000, then the most you can get is $5,000.  The court won’t let you “stack” complaints on the same claims. You may also be limited in the amount of double or treble damages or fees and costs you can claim.

*      Anytime you take someone to court, there is a chance that you will be counter-sued. You can be counter-sued in small claims court.

*      Appealing your case if you lose may be difficult or impossible.  But if the defendant loses, he or she may have a far easier time filing an appeal.  If you are worried about giving up the right to appeal, check your local rules–small claims court may not be for you.

*      You won’t be able to collect your money right away, unless the defendant agrees to pay up on the spot.  Once the small claims judge or magistrate rules in your favor, you still have to get a writ of execution to get your money (unless, of course, you and the other side agree on a payment plan).  The writ allows a sheriff or other government official to seize and sell the debtor’s property to get your money.  (You will have to pay a fee for the sheriff’s services.)  Don’t worry, though, if the debtor can’t pay up right away–depending on your state’s law, a writ of execution may be good for up to 20 years!!

Remember, these pros and cons are based on how small claims courts generally operate.  You’ll want to check the specific small claims rules for your state, which you can find on your state court’s website.  And don’t be afraid to seek out a law librarian or go to your local court services center, if you have one, for answers to any questions you might have.

And now for the warning.  If you google “small claims,” you’ll come across many so-called informational sites and videos that are run by law firms.  They claim to be offering tips to help you represent yourself in small claims court, but in the end they try to convince you that you’ll be so much better off if you hire one of their lawyers.  Don’t take the bait. It’s normally pretty easy to represent yourself in small claims court.  Save the money for something enjoyable.

‘Til next week.

Sandy Lundy

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Disclaimer

This blog is for informational purposes only and does not constitute legal advice. Also, it does not create an attorney-client relationship between the author, Sandy Lundy, and any reader or correspondent.
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