Topic: A Primer on Small Claims Courts (Read 1991 times)

I thought I'd post this here, as I often get a lot of people saying they've been scammed and if I won't take the case on with my collection agency, they want to go after the person in small claims court. More can be found in my forum VIP section - thecollectorsdomain.com. I have 7 years in the investigation / litigation collections field, so I hope some people can benefit from this article.   - Eric

A Primer on Small Claims Courts

The jurisdiction of small-claims courts typically encompasses private disputes that don't involve large amounts of money. The routine collection of small debts forms a large portion of the cases brought to small-claims courts, as well as evictions and other disputes between landlords and tenants, unless the jurisdiction is already covered by a tenancy board.

A small-claims court generally has a maximum monetary limit to the amount of judgments it can award, often in the thousands of dollars/pounds. By suing in a small-claims court, the plaintiff typically waives any right to claim more than the court can award. The plaintiff may or may not be allowed to reduce a claim to fit the requirements of this venue. 'Court shopping'—where a plaintiff reduces the damage claim amount to have a trial in a court that otherwise does not have jurisdiction—is strictly forbidden in some states. For example, if a plaintiff asserts damages of $30,000 in hopes of winning an award of $25,000 in small-claims court, the court dismisses the case because the court does not have jurisdiction to hear cases in which asserted damages exceed the court's maximum amount.

Thus, even if the plaintiff is willing to accept less than the full amount, the case cannot be brought to small-claims court. To bring the case to small-claims court, the plaintiff must prove that actual damages are within the court's jurisdiction. In some jurisdictions, a party who loses in a small-claims court is entitled to a trial de novo in a court of more general jurisdiction and with more formal procedures.

This link shows the maximum amount that a plaintiff can sue for, per state:
http://www.nolo.com/legal-encyclopedia/small-claims-suits-how-much-30031.html

Winning in small-claims court does not automatically ensure payment in recompense of a plaintiff's damages. This may be relatively easy, in the case of a dispute against an insured party, or extremely difficult, in the case of an uncooperative, transient, or indigent defendant. The judgment may be collected through wage garnishment and liens.


Below are some basic steps to take when you win the case:

1) ASK FOR PAYMENT - Usually the debtor will have 30 days to pay the judgment amount or post-judgment remedies may be ordered.

2) PAYMENT REVIEW HEARING - When you got a copy of the judgment, it probably included a "Notice of Hearing," which set the date for a payment hearing or payment review hearing. If the defendant-debtor hasn't paid you by the date specified in the judgment, he must show up at this hearing. Before the date of the hearing, he has to complete a Financial Statement and give you a copy of it. Here he gives details about his financial condition and assets.

At the hearing, the magistrate may set up a payment schedule that lets the debtor pay off the judgment over time. Sometimes, the magistrate may find that the defendant is "judgment proof" and can't afford to pay anything at all right now. The magistrate will then grant a "judgment extension," which is usually for one year. At the end of that time, you and the defendant must appear at another payment review hearing to see if the defendant is now able to pay you.

3) NOTICE TO SHOW CAUSE - If a payment review hearing wasn't scheduled and the defendant-debtor hasn't paid you, you may ask the magistrate's office for a Notice to Show Cause," which orders the defendant to appear before the magistrate. A constable or a deputy sheriff has to deliver or "serve" the notice on the defendant, and you have to pay a fee for that service. The fee, however, will be added to what he already owes you.

4) CAPIAS (CIVIL ARREST WARRANT) - If the defendant doesn't show up at a scheduled payment review hearing or after getting a Notice to Show Cause, and if you appear and sign a sworn statement that the defendant hasn't paid you, then you may ask the magistrate to issue a capias (kay pee us). This is a civil arrest warrant asking a constable or deputy sheriff to arrest the debtor and bring him to court. Again, you have to pay a fee for this, but it, too, is added to the amount of your judgment.

5) WRIT OF EXECUTION - Also know as "executing judgment," this is when you take (or levy) some of the debtor's property or assets to pay what he owes. You need to ask the magistrate for this writ and you have to be able to specify what you want levied and where it's located. The Financial Statement that the defendant filled out may contain some valuable information, such as bank names and account numbers. Once you've been granted a writ:

    - You have to take it a constable or deputy sheriff who serves the area where the defendant lives or where the property is located, and provide information on where the property or assets can be found
    - The constable or deputy must deliver it to the defendant. Then he may take the items listed in the writ
    - Unless the defendant files a ¿claim of exemption¿ (meaning that the asset can't be garnished by law), the constable or deputy will either give the money to you directly or sell the property and give you the sale proceeds

With a writ of execution, you can usually get to the debtor's:

    - Money in bank accounts
    - Personal property, like jewelry or art
    - Motor vehicles (provided there's no liens currently placed on the vehicle and the debtor has paid off the vehicle, fully owning it)

Exempt property or money that can't be reached through the writ include the debtor's homestead real estate and money he receives from public assistance programs, such as worker's compensation, unemployment and Social Security benefits.

Wage Garnishment
This is when you arrange for money to be taken directly out of the defendant's paycheck and paid to you. To do this, you have to:

  -  Get a writ of execution from the court
  - Complete an Application and Order for Wage Garnishment, which is available at the clerk-magistrate's office. This form tells the debtor's employer to withhold some of the debtor's wages, which can't be more than $125 per week, and pay it to you
  -  Once you get an Order for Wage Garnishment, you have to arrange for it to be delivered to the defendant's employer by a constable or deputy sheriff


Lien on Real Property

This will prevent the debtor from selling his real property or even refinancing it without having to pay you. To make this work, you need to take a certified copy of the small claims judgment to the land records office in the county where the land is located. Once you record the judgment, there is a lien on any property that the defendant owns in that county.


Satisfaction of Judgment

You're not required to do anything once the defendant-debtor has paid off the judgment. However, the debtor may ask you to sign a "Satisfaction of Judgment" form. By doing so, you agree that the defendant has paid you and that he no longer owes you anything. The defendant can file that paper with the clerk-magistrate's office, and it will become part of the record.