Bringing a Collection Suit

If you reach the point that you need to take some action on a past-due account, you can turn it over to an attorney, or you can turn it over to a collection agency. As a third alternative, you can file suit yourself here's how:

Each state has a small claims court or its equivalent. The jurisdiction of those courts is limited by a dollar amount, usually about $1,500. In other words, the most you can recover in any suit brought in small claims court is $1,500 (plus the court costs you have to pay when you file your suit).

You do not have to be a lawyer to file a suit in small claims court. In fact, the system is set up to help nonlawyers who want to use it. For example, the rules about what you have to put in your complaint and the rules of evidence at trial are greatly relaxed.

To file a complaint in small claims court, go to your local state courthouse, and tell the clerk that you want to file a small claims complaint. The clerk will help you fill it out. Usually, all you have to do is put in your name, your customer's name and address, the amount you're entitled to recover, and the grounds for bringing suit ("I delivered goods to the customer and he didn't pay me for it"). In some states, all you have to do is check a box to indicate the grounds for the suit. If your state law allows it, ask for interest on the debt. Once you pay the court costs (it varies, but it's usually about $40-$50, which you can recover from the customer if you win), you're done.

The sheriff will serve a copy of the complaint on the customer, who will have a certain period of time to respond (usually about two weeks). If the customer does not file an answer within the allowed time period, you can go back to the courthouse and get a default judgment against the customer. The clerk will help you. All that is involved is that the judge will ask you to swear to the truth of the statements in your complaint, and then will sign an order giving you a judgment in the amount you requested. When you go to get your judgment, you should bring any signed sales receipts or other proof of the debt with you. In most cases, the judge won't ask you to produce them, but you should have them with you just in case.

Once you have your default judgment, you should have it recorded. Ask the clerk for help. Essentially, this will involve taking a certified copy of your judgment to the property records clerk, who, for a small fee, will place your judgment on the official record. It's well worth the small fee, because you'll now have legal rights to money coming into your customer.

If, on the other hand, your customer files an answer within the allowed time period (or after the time period but before you are able to get a default judgment), the clerk will set a court date. You should bring whatever written documentation you have with you. Generally, the judge will ask you to tell your side of the story in your own words. You'll speak first, since you brought the suit. Then the judge will ask your customer to tell his or her side of the story. It's usually quite informal. You'll both be given the chance to ask each other questions. Since it's usually your word against the customer's, the written documentation is particularly important. The more documentation you have, the better off you'll be.

If the judge rules in your favor, you'll have to wait to see if your customer appeals the decision (usually around two weeks). If he or she does, and you're interested in pursuing the case, you should go talk to an attorney at this point. If the customer doesn't appeal, the judgment is final, and you should follow the steps outlined above to have the judgment recorded.

If the judge rules in your customer's favor, you can either drop the matter, or file an appeal. If you want to appeal, you should discuss it with an attorney, but act quickly because you may only have about two weeks to file your appeal.