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Truth About SMALL CLAIMS COURT: How to File Case and MYTHS Exposed

Updated on June 20, 2013

SMALL CLAIMS COURT & MY EXPERIENCES

As part of daily life, things go wrong. Most of the time these things can be resolved without the need for small claims court (which is something we will discuss further down), but other things simply need to be "hashed out" in court by a Judge because neither party can agree, thus leaving the Small Claims Case to the Judge to rule on.

I have been to Small Claims Court and I will tell you this much; 95% of what is posted online is likely NOT written by someone who has ever stepped foot into a courtroom.

Small Claims court is basically what you see on shows like Judge Joe Brown, Judge Judy, Judge Mathis, etc - but not 100%. Although these shows are NOT "staged", it's not a true reflection of what you will experience, and the aftermath of such. So let's start at the very beginning -

DO YOU NEED SMALL CLAIMS COURT?

Obviously someone has wronged you in some way and you're considering filing a case (or I assume you wouldn't be reading this article). But let's first examine what you can sue for and what you can't. (*Technicality: You *can* sue for anything, but if you don't have a case you're just wasting your time and you're going to be out money and likely humiliated to top it off)

WHAT YOU CAN SUE FOR:

1. Each state has different laws on the maximum amount of money you can sue for in Small Claims court. I believe the lowest states are $2,000 - $2,500 whereas I have heard Texas and others are $10,000. Michigan is $5,000 as of this date. So before you even consider your case, you need to make sure it falls into the proper amount. If you are out $30,000 and your states Small Claims Court only allows for a $5,000 maximum Judgement, then you do not want to file a small claims case, you instead want to file with your district court.

2. You can sue for LEGITIMATE, PROVEN financial damages. Court is never a way to "hit the lottery" and it's not going to give you "profit", so if you are expecting to come out "ahead", think again. The purpose of suing is to have a wrong-doing made right; basically, you suffered a loss (financially) and you need to be compensated - but not for anything more than what you have spent.

3. Examples of things you can sue for:

A.) In my first case, I had brought my truck into an automotive shop to have electronic work preformed. The wiring was done improperly and resulted in a huge loss when water entered into the inside of my dashboard and destroyed writing, computer chips and more. Had the company taken the time to properly install and seal the new cords, this never would have happened so due to negligence on the companies behalf, I had to come out of pocket and pay for all of the repairs plus renting a car. I was rightfully entitled to be reimbursed for my damages.

You can sue for anything of this nature, including, but not limited to: warranty issues, services that were paid for and not preformed, services that were preformed but not as agreed upon, etc.

B.) If you loan something to someone and they damage it (even if by accident) you can sue for the DEPRECIATED cost of the item.

C.) If you loan someone money and they refuse to repay you, you can sue. But the money cannot be a "gift" and both parties have to have a thorough understanding that the money was never a gift. If you DID give the money as a gift, you can not later sue for it, even if you and the giftee have a falling-out.

D.) If you purchase something for someone, under the agreement that they shall repay you for such, you can sue. Once again, you cannot gift something then, later, demand repayment.

E.) Landlord / Tenant Issues. Theres all kinds of Landlord / Tenant issues ranging from refusal to make repairs or return a security deposit to tenant damages.

F.) Neighbor Disputes. For example, if your neighbor plants a bush on your porperty (over his / her property line) or your neighbor drives across your lawn, you are entitled to damages.

G.) And more

Next let's discuss the difference between a "gift" and a "loan" -

DIFFERENCE BETWEEN A GIFT AND A LOAN

A gift is defined as "A thing given willingly to someone without payment". A loan is defined as "A thing that is borrowed". Therefore, a "loan" is NOT a "gift". But the lines can be blurred, per say and I have seen this happen a LOT.

First scenario: Let's say you have an adult child who was evicted from their home, and you allow them to stay with you; do they owe rent? Or is your residence a "gift"? Was there a time duration provided that was to be "rent free" or is it assume that he/she can stay for months or years free-of-charge while you pay their way?

The above scenario and determining whether is is a "gift" or a "loan" would be based on conversations and agreements of both parties. You cannot opt to bill for something that you "gave". However, you equally have the right to throw the individual out, without an eviction process or ask them to begin paying rent as of X-date if they wish to continue to stay.

Second scenario; You mention to a family member that your car needs new tires. The following day that family member shows up at your doorstep with $900 in new, top of the line tires. Do you now owe them for this? Or is this a "gift"?

In this case, if you did not ask the family member to purchase tires, it would be assumed that this is a very nice gift. Things change if, at the time the family member shows up, they hand you a receipt and ask for payment. You have the right to ask the family member (hopefully politely) to return the tires.

The Third Scenario is when confusion exists work preformed. Let's say your boss asks if you want to come over and help him clean his garage this weekend. Are you assuming you will be paid for your time? Or are you volunteering in a friendly way to help out a good employer?

Again, this issue would depend on if their was any agreement of pay.

Fourth, your girlfriend / boyfriend needs a cell phone, so you purchase one for them in your name. They then run up a giant bill and break up with you. Do they owe you for the phone because of the bill? Or because you broke up? Or was this a "gift"?

In order to determine if it was a gift or not, you need to refer to the definitions of such; did you, without conversation about payment, give (AKA "gift") the phone? And at the time you gave the phone, did you discuss minutes / overages, etc? If so, did you discuss repayment for such? You are NOT entitled to get the phone back or the bill paid if the phone was a "gift", EVEN IF your relationship is over. However, you can eat the cost of the cancellation fee and no longer deal with this person.


So clearly, a Gift and a Loan are not the same.

Now let's discuss the actual filing process:


HOW TO FILE A SMALL CLAIMS CASE

In order to file a small claims case, you will need to know the party you are filing against (and their address so they can be served). However it is possible to file a Small Claims Case against "Unknown"; this would mean that you do not know the name / address of the person you wish to sue, but you need a case number in order to send subpoenas or find their information.

Filing a case against someone in a different county or city: You will need to file the case in THE CITY IN WHICH THEY (or their business) resides.

Filing a case against someone in a different state: Unfortunately, you will have to file in their state, which will require you to be in their state for the case. However, in some situations, the initial filing can be done online, thus leaving you with one less trip. NOTE: Take into consideration that if you file out-of-state, a common tactic is for the person you are suing to give you "the run around" (rescheduling at the last moment, requesting a second court date and so on; thus making you spend more and more. Their goal is to get you to give up due to the travel expenses)

The cost of filing a small claims case is marginal. It is around $25 - $50 (some states may be more).

AFTER THE CASE IS FILED

After your small claims case is filed, the individual you are suing needs to be "served". In Michigan you can choose to have them served through the court or you can choose to hire someone to serve them. The advantage to hiring someone is that they will track the person down whether it be at work or at home or wherever. The court will only attempt to serve at the provided address.

After the individual is served, you will receive a court date via mail.

The court date is usually about 15-30 days from the time the individual was served, so you have plenty of time to gather additional evidence if need be.

APPEARING IN SMALL CLAIMS COURT

Small claims court can take all day. Even though your paper may say 8:30am, expect to sit until 3:00pm. Since you are filing in Small Claims, you are meshed with all the other cases; even non-small-claims cases. Its NOT exciting or fun like it looks on television. The seemingly unending cases before yours will likely be very dull. On the first day I went, case after case was about credit cards and the defendant didn't show so the judge granted the plaintiff the judgement, then came paperwork and another case involving the same thing. *Yawn*

When you finally get a chance to go up to the stand you will be sworn in then the judge will quickly review your case, look at your EVIDENCE then allow the defendant to share their side of the story. THERE IS NOT back-and-fourth "bickering" like you see on television. You aren't even allowed to talk to the other party at all. There is also no time for emotional stories like you see on TV because the judge has dozens more cases to get through and your emotion has nothing to do with whether you are rightfully owed money or not.

The Judge then makes a ruling and that's it. Either you won or your case was thrown out.

.... But it doesn't end here....

Source

HOW TO COLLECT SMALL CLAIMS COURT JUDGEMENT

Here's where the "myths" begin.

Although you were awarded a judgement, you now have to collect, and collection can become awful. In my first case, the auto repair shop owner was found at fault and my judgement was a little over $4,000. The shop owner immediately sold his company in efforts to dodge collection. He then refused to repay a penny, despite the court order.

This is very common and has to be taken into consideration before you sue; are you suing someone who CAN pay back the judgement? If you're suing the unemployed guy that lives in his parents basement and drives his parents mini van, chances are you likely won't be collecting jack for a loooooong time, if ever.

So now that the individual refuses to pay, what can be done?

DEFENDANT REFUSES TO PAY SMALL CLAIMS JUDGEMENT

If the defendant refuses to pay, you have a few options, but nothing comes free. Each paper you file costs you more money (although it will be added onto the defendant debt; so although you're spending more today, they also owe more tomorrow.)

STEP 1: DISCOVERY

This is a paper you need to file at the same court you appeared at the first time. This will be served on the defendant and order them to tell you information including their bank accounts, bank account numbers, assets, etc. If the defendant refuses to cooperate, they will be held in contempt of court because a Discovery is a legal order.

STEP 2: DECIDE WHAT YOU WANT TO DO

There's a few different options: you can file a property seizure, freeze bank accounts, seize tax returns and/or garnish wages. And you have the right to keep on doing so until the full balance has been paid off - but remember, the balance-due will continue to grow as your costs continue to grow. (interest can also be added on yearly)

SMALL CLAIMS COURT MYTHS EXPOSED

Like I said when I first started writing this article, the majority of people writing about Small Claims Court seem to have never been to Small Claims Court and are simply repeating information they read elsewhere. So here's some MYTHS that need to be exposed:

MYTH 1: Sue for the purchase price of the item

TRUTH: If you bought a handbag for $500 in 2009 and let the defendant borrow it in 2013 and she lost it, you are NOT entitled to the $500 you paid. You are entitled ONLY to the current market value. If the current, depreciated value is $100, that is all you stand to "win" (you will also be awarded your court costs)

MYTH 2: "Lost Wages"

TRUTH: If you filed a case, you are not entitled to be compensated for your time off work, even if the case ends up being multiple days worth of time.

MYTH: "Mental Duress"

TRUTH: Even if the defendants actions caused you to have to seek therapy, you are not going to have therapy or your co-pay awarded to you. The only way you are going to be awarded any form of medical bills is if you were directly hurt, such as the neighbors dog bit you, thus causing you to have 30 stitches.

MYTH: "If I don't win, I haven't lost anything"

TRUTH: When you file a suit, you open the window for a counter-suit. If you cannot prove your case, but the person you are suing has opposing evidence, you may actually walk out in debt to the person you sued.

MYTH: "It was a verbal agreement"

TRUTH: Without evidence, you stand a very slim chance of winning anything on a "verbal agreement", even if you're being 100% honest. Remember; even though both parties "swear" to tell the truth, this doesn't mean they will. If the defendant denies your "verbal agreement" ever taking place, the "burden of proof" rests on you.

MYTH: "There's no other alternatives to Small Claims Court"

TRUTH: There are lots of alternatives to small claims court. Just check out my article!

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    • RachaelLefler profile image

      Rachael Lefler 3 years ago from Illinois

      Useful hub! I think if more people took this advice to heart there would be less people looking dumb on those court shows. :)

    • profile image

      Dernell 2 years ago

      I much prefer inoafmrtive articles like this to that high brow literature.

    • profile image

      john verkitus 6 days ago

      being sued for unknowing gift

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