Small Claims Court Can Bring Big Relief

March 4, 2013 — -- I just came back from a hair appointment where my hair dresser was gushing that he recently won a case in small claims court and that it was all very doable for him. (He had done $2,000 of hair extensions on a customer whose check then bounced!)

Hearing him crow made me want to remind the rest of you of this important tool. It's called small claims court, but it can be a big relief if somebody owes you and you haven't gotten satisfaction any other way. The dollar amount that you can sue for in small claims court varies depending where you live. Some states limit small claims to $1,000 and others allow claims up to $5,000.

If your dispute is for slightly more than the limit, it may still be worth it to file a small claims suit. You won't be able to sue for the full amount, but you'll avoid the expense of a regular lawsuit. The small claims filing fee varies from state to state. It can be as cheap as twenty bucks, or as much as $200.

Generally, you have two to four years after the initial dispute to file a small claims suit. Check the statute of limitations in your state. Usually you can file in the county where the business is located or the county where you live. Not all jurisdictions offer small claims court, but often if they don't, they relax the rules in regular court for people trying to settle small disputes. To file your suit, usually you fill out a form stating your name, the defendant's name and the nature of the dispute.

You have to give the court the correct name and address of the defendant in order for your suit to go forward. If it's a company, you need the name of the owner. If it's a corporation, you need the name of one of the corporate officers. If the corporation uses a fictitious business name, you need the real corporate name. For example, you may know the business as "Mack's towing," but the actual corporation may be called "Mack Jones Inc." Usually your secretary of state can give you information about a business and its owners. You will have to pay to have your lawsuit served upon the defendant. Some states allow you to do this by certified mail. Others require you to pay the sheriff's department to hand deliver your lawsuit.

To prepare for your day in court, you should write up a chronology of your dispute with the defendant. Also gather together every piece of written evidence you have: contracts, receipts, leases, etc. Make multiple copies, so you'll be able to share your documentation with the court. If applicable, consider taking photographs that help prove your point too. Some states allow you to call witnesses to small claims court. Finally, prepare your presentation by writing out bullet points that you want to cover and noting which documents or witnesses help illuminate each bullet point.

The great thing about small claims court is that you don't have to pay a lawyer more money than your dispute involved in the first place. In fact, often lawyers aren't allowed in small claims court. If you want to fine tune your case, you could hire a lawyer for an hour or two to go over the case with you outside of court. Once you get to court, a judge or arbitrator will hear your case. You won't have to know the rules of court procedure and you'll be able to present your side in plain English.

If the defendant doesn't show up in court, often you win automatically. Keep in mind that if you lose your case, you do not have the right to sue again in a regular court. However, if the defendant loses, he does have the right to appeal to another court.

If you win, there's still no guarantee that the defendant will pay the judgment. In some states, the court has no power to make the defendant hand over the money. Other states are more helpful. It's possible the defendant simply doesn't have the money to give you.

At that point you can research whether the defendant owns any real estate and put a lien against that real estate. When the defendant goes to sell the property, he will have to pay you out of the proceeds. If the defendant owns any valuables like a car or store inventory, you may be able to get the sheriff's department to seize those valuables and auction them off to satisfy your judgment. You may also be able to garnish the defendant's wages.

In that case small claims court has lead to a big job: getting your money.