Debt Collection in Small Claims Court

Debt collection is one of the most common legal issues faced by small business owners. In addition to the effect unpaid invoices have on your bottom line, debt collection can be stressful and time-consuming. Your LegalShield provider law firm is ready to help by drafting collection letters on your behalf. Unfortunately, a collection letter is not always enough to prompt payment and additional legal action may be necessary. Small claims court may be an option for your collection matter.

The following information will help you understand the process. Contact your LegalShield provider law firm to learn more about small claims court in your state.

• Exhaust your alternatives. Make an effort to collect the debt before going to court. Your LegalShield provider law firm can write a collection letter on your behalf. You may also consider working out a payment plan or other alternatives. Review our article, 8 Critical Steps for Small Business Debt Collection for more information.
• Know the maximum amount you can collect in small claims court. Different states have varying thresholds for what amounts can be disputed in small claims court. For instance, in Virginia claims may not exceed $5,000. In California claims made by sole proprietors and individuals may not exceed $10,000, while corporations and other entities are limited to $5,000. There may also be limits on the number of claims you can make in a calendar year. Talk to your LegalShield provider law firm about the laws that govern small claims court in your state.
• File the correct paperwork. It's important to file the correct paperwork in order to receive a court date for your matter. Discuss the process with your LegalShield provider attorney to make sure you understand the necessary procedures to bring your matter before the court.
• Know who will need to appear in court. Some states do not require the business owner to appear in court and may allow you to send an employee on behalf of the company. In those cases, it is important to send someone with first-hand knowledge of the matter, such as a bookkeeper or a manager, who dealt directly with the customer. Speak with your LegalShield provider attorney to learn more about the laws in your state.
• Compile and organize your evidence. The quality and accuracy of your documentation may make all the difference in court. A payment policy or contract, signed by the customer, will help your case. In addition, you should have with you copies of invoices, past due notices, or any other correspondence you sent to the other party.
• Prepare and rehearse your argument prior to court. Part of being prepared for court involves knowing what to expect and how to properly present your argument. Your LegalShield provider law firm can help explain what to expect and what information may be most important to the court. Call and speak with an attorney today if you have any questions about small claims court or need assistance collecting a debt.