Let’s say you have a “friend” who is very good at borrowing money but not very good at paying it back. The question becomes how to collect debt owed to you quickly. That’s where small claims court comes in. You can use the court to get a judgment and then collect your cash.
I started thinking about this when my client told me someone hit her car in the parking lot of Costco. My client had a high deductible of $1,000. Since the damage was $3,000 he’d get the car repaired, but he’d still be out $1,000. I suggested he sue the person in small claims court, but he didn’t know anything about the process and neither did I, so I decided to find out.
What is small claims court?
If you have suffered damages, you can sue without using an attorney and hopefully collect the money you’re due. In California, you can sue for up to $7,500 and still do so in small claims court. Different states have different limits. The cases are heard quickly and adjudicated inexpensively.
How do you file a small claims lawsuit?
Before you file a claim, you should send a letter demanding payment. The reason for this is that once you file your suit, you’ll have to sign a sworn statement saying you did.
Having sent your letter, get all your records together – anything proving your case. Also, bring to court any witnesses who make your case stronger. When you go down to the courthouse, make sure you have the legal name of the person you are suing as well.
At the courthouse, go to the small claims department and get the proper forms to fill out. You’ll also have to have the filing fees and pay in cash, money order or company check. If you win the case, you’ll get these costs back. Don’t worry.
Keep in mind that you need to file your claim in the country where the injury took place. If somebody smacked your car in LA County, that’s where you file. If they provided a faulty service in Ventura County and you live in LA County, you file in Ventura County. If you are suing a company, you can sue them where the damage occurred or where the business is located. But if you do have a valid claim against a business, they will hopefully have good business insurance and make a settlement. But let’s continue.
Next, you must have the defendant served with your papers. You can use the sheriff or a private process server. I’ll have to admit, if it were me, I’d use a sheriff. (Kind of puts the fear of G-d into somebody when Sheriff John knocks on your door…don’t it?)
Follow up with the court clerk after a few weeks to determine exactly when the defendant was served, because that’s the date that will be used to determine the trial date.
When you get to court, most judges will first suggest that you mediate the claim. If you can’t come to terms, the judge will listen to both sides of the story and review evidence. Be sure to bring all the evidence you might need: pictures, statements, receipts, etc. You should also type up a summary of why you think this person owes you money. The judge will announce his or her decision either right then or later on.
Assuming you win the case, what happens next?
You’ll get a judgment against your defendant, and this is where the fun begins. The court isn’t going to enforce your judgment. If the slug who hit your car doesn’t want to pay up, you’ll have to get to work. You have to identify the defendant’s assets and where he works. This is where you become an expert at personal debt collection.
You can then have his bank account and his wages attached. These steps aren’t the same as IRS Wage Garnishments but it’s still powerful. Without the judgment from the small claims court, that would be tough to do. You also have the options of putting a lien on the defendant’s real estate or getting the sheriff to seize his personal property. If you can’t locate the defendant’s assets, you can ask the court to order him to come in and spill the beans on where the money is. You’ll have to pay to get this done, but you can recover these costs too.
The last time I was in small claims court was when I was 18, and the case was mediated. Have you ever been to small claims court? What was your experience?