Title: Suing in Small Claims Court May Be an Effective Way to Collect Small Debts
Author: Larry Holmes


I hate to see creditors having to spend a lot of time and money to collect small debts. It's just not cost effective.


Suing in small claims court may be a good solution for dealing with small debts. There are some advantages to using this court. One advantage is you don't usually need an attorney. You can do it yourself. In fact, some states don't even allow creditors to be represented by attorneys in small claims court.


Also, you will probably get a hearing pretty quickly -- usually with 30-60 days after filing. There will be a maximum amount of debt that you can take to small claims court. It generally ranges from about $1,500 to about $15,000 depending on the state.


However, sometimes it's a good idea to get a judgment against the debtor for the maximum limit even though the debtor owes you more than the maximum.


For example, let's say your debtor owes you $6,000 and the maximum for your state is $5,000. It may be a good idea to go ahead and get a judgment for most of it -- the $5,000 maximum -- because, again, you can do this yourself.


There will be a filing fee and a small fee to have the debtor served. In most small claims courts total fees should be less than $100.


You will need a verifiable address so the court can serve the debtor. You will also need proof of debt when you go to court.


When the debtor gets served one of two things is likely to happen. The debtor may call you and want to settle. When your debtor gets a summons it may finally get his/her attention.


The other likely event is you will show up on the hearing date and your debtor does not. When that happens, as long as you have proof of debt, you should get a default judgment in your favor. Unfortunately, the judgment does not necessarily assure that you will get paid. So what happens next?


After you are awarded the judgment the debtor will usually have anywhere from 10 to 45 days (depending on the state) to pay you or file an appeal. If the debtor does not pay or file an appeal, there are possible sanctions available to you.


One is a Writ of Garnishment. If the debtor has a job, checking account, or savings account you may be able to garnish one of those. However, there are four states that, as of the date of this writing, do not allow the garnishment of wages -- Texas, Pennsylvania, North Carolina and South Carolina. But even in those sates you can garnish bank accounts if you know where the debtor has an account.


Another is a lien. If the debtor owns real property you may be able to file a lien on the debtor's property. When the property is sold, you will be paid out of the proceeds.


It will be your job to find out how to implement the sanctions that are available to you. Contact the court clerk's office of the small claims court you're using for further information.


Something to consider is that even if you know you're not going to get paid right now, it may be a good idea to get a judgment against your debtor anyway. Judgments are good for 5 to 20 years (depending on the state). And in most states they are renewable.


Before the statute of limitations expires on the judgment, you're likely to get paid. The debtor may want to buy a house, or re-finance a house, or apply for a job that requires a credit check.


Something may happen that will cause the debtor to not want an unpaid judgment on his/her credit report. And you may get paid at that time. In fact, some successful creditors like to keep judgments in the pipeline. As they're getting paid on old judgments, they continue to file new judgments.


So when you have a relatively small debt to collect -- and you find yourself saying, "Enough is enough. I've already wasted too much time on this." -- suing in small claims court may be a cost effective way to collect the money.

The Author Larry Holmes invites you to visit larrydholmes.com You will learn about the culture of money: making it, investing it, managing it and collecting it. Article Source: http://EzineArticles.com/?expert=Larry_Holmes -