Small Claims Court

 

At one point or another, small business owners will have overdue accounts receivables. Collecting can be achieved through a variety of means. One such option is small claims court. This is a cost-effective and friendly process that can help business owners achieve success with reluctant debtors. The current limit on small claims is $10,000 for persons or $5,000 for businesses.

Demand Letter

Before you begin, it is highly recommended that you send a formal demand letter to the person that owes you money. It should include the basis for the debt and how much is owed. This is not legally required but does help establish what the dispute is about and your good faith effort to resolve the dispute.

Starting The Process

When the debtor does not respond to the demand letter, or disputes the debt, your next step may be to file a suit. It begins by completing a 5-page form and filing it with the court where you live.  There will also be fees that you will need to pay, or you can ask the court to waive those fees. The maximum fee to file is $75.00. The court will issue a court date once the paperwork is filed.

Notifying The Defendant

After your paperwork has been filed and your fees have been paid, you will need to notify the defendant of the lawsuit and court date. This can be done a few different ways but the one I recommend is having the sheriff’s department serve the defendant. You will need to contact your sheriff’s department for instructions on how to submit the paperwork for service. There is a fee associated with the sheriff department’s help.

Filing Proof of Service

Once the defendant has been served, the sheriff will fill out a proof of service form. Once you receive this form, you must file it with the court. The sheriff may also file it with the court on your behalf.

Preparing For The Hearing

When you go to court, you need to bring 3 identical binders with you; one for the defendant, judge and yourself. Prepare this well in advance to give yourself time to organize and prepare for your hearing. The binder should include why the debt is owed, for example a copy of the receipt or contract. It should also include any evidence about your attempts to collect the debt. Include your demand letter. If you have diagrams or photographs that support your claim, include those. A well-organized binder demonstrates to the judge that you are prepared which immediately gives you some credibility. The judge must often rely on who he/she believes most and your credibility will be critical.

Court Day

When your case is called present a binder to the judge and defendant. The judge will ask you to tell your side of the story. Your story should include specific reference to the information you included in the binder. Once you are done, the judge will ask the defendant for his/her story. The judge may give each party the opportunity to dispute what the other party said. A well-prepared binder should also include information to address what the defendant might argue. For example, a defendant may argue that the services you provided were not what you agreed to provide. If you have any evidence that would dispute this argument, like an email from the defendant saying they were very pleased, include this.

Judgment

Judges have the authority to make an immediate decision. More commonly a judge will dismiss the parties and within a few weeks make a decision which each party will be notified of. If you lose, you have limited options to disagree with the judge. If you win, the next step is to collect the judgment. The court will not do it for you. Watch out for a future blog on collecting a judgment as this can be the most challenging, and often frustrating, part of getting paid.

The following two tabs change content below.

Lawvex

At our core, Lawvex believes that major changes in the legal industry are long overdue. Thanks to advancements in various technologies, as well as common sense and compassion for our clients, we have developed an innovative approach to the practice of law, as well as the attorney-client relationship where you will experience an open and transparent solution to your legal needs.
%d bloggers like this: