When someone owes you money, it can be frustrating that you've had to wait unnecessarily. Even though you may both have agreed to a repayment date, they may have missed it and not be responding to your request for payment.
If someone owes you money and is not making a plan to repay you or trying to work out a solution, you have a few options.
Although they may refuse to return your money, this does not mean that your money is lost. Consider these options, and file with Dispute if you'd like to use the legal system in an affordable way.
Be sure to check the statute of limitations and make sure you're pursuing legal action within the appropriate time frame. This may vary by state.
Talking About a Missing Payment
The first thing that most people should do before turning to the courts for help is to ask the person who owes them money. If you have documentation explaining when payment was due, you may want to bring this to clear up any misunderstandings.
If the other party didn't realize they didn't repay you on time, they might be willing to set up a repayment plan or pay you when you talk to them. If so, you can avoid going to small claims court.
Gather Documentation and Send a Demand Letter
Remember, the paper trail you create is essential to get repaid. You need to keep receipts, text messages, emails, letters or other documents that explain that the other person will pay you back for the money owed. You might have a receipt for services rendered or evidence that you sold them something they never paid for.
If they won't meet with you about the debt or disagree that they owe you money, it's time to gather that documentation and prepare to send a demand letter. Online services like Dispute can generate and mail a letter for you. Additionally, a professionally worded letter and letterhead will increase your chances of payment.
In the demand letter, include:
- How much money the other person owes you
- The date by which you want a response
- An option to set up a payment plan
- Information on when the debt was created and why it was established
- The option to mediate
- Where to send the payment
- The intent to sue if they do not respond
Wait a short time, usually 7 to 14 days or whatever length of time you stated in the demand letter, before filing with the small claims court. If someone owes you money, write them a demand letter. Strongly worded demand letters on professional letterhead show the reader that you’re serious.
Get Ready for Small Claims Court
If the other party doesn't respond or refuses to pay, you may need to go to small claims court. Usually, small claims courts handle cases valued at $10,000 or less, though this varies by state.
In small claims court, you will need strong evidence that the other party owes you a debt. Provide copies of the initial agreement or contract, receipts, text messages, emails or other documents referring to the case.
Usually, a small claims court hearing will take place 30 to 75 days after you file a lawsuit. If the other party doesn't respond, you may automatically have the court rule in your favor and enforce the debt.
How Much it Costs
So how much will you spend by suing in small claims court?
- Court Filing Fees: The amount you will pay to file a small claims lawsuit depends on how much you are suing for and where you are suing. You can expect to pay between $30 to $400 to file the lawsuit. If you cannot afford to pay court fees, you can ask the court to waive the fees.
- Serving Costs: Once the lawsuit is filed, you must notify the other party that you have sued them. This is called "serving." Serving Costs can range from $20-100 depending on the local area.
The Benefits of Small Claims Court
- Court filing fees are cheaper in small claims than in other courts.
- The process is faster in small claims than in other courts, as your hearing will usually be scheduled 30-70 days after you file the lawsuit.
- Lawyers are generally not allowed in small claims, which helps keep the costs of suing low.
How to File a Small Claims Lawsuit
- Prepare and File the Court Paperwork - If you end up in 30-40% of cases where the demand letter doesn't work, you can prepare and file the court paperwork for small claims court next. The upside is that you can typically do this yourself and don't need to send much evidence with your filing. You just need to know the name of the party you're suing, the amount you're suing for, and answer some basic yes/no questions.
Again, you can do this yourself, or use Dispute's Small Claims Filing platform, which includes online paperwork prep, live online notarization, and online filing.
- Serve the Defendant - After the court accepts your paperwork, you have to serve your court paperwork to the defendant to notify them they're being sued officially. This is also another point where people will often realize they should settle before going to court. This is the one step you aren't allowed to do yourself. To avoid bias, the court requires you to get someone else to serve your case and file a proof of service in court (a simple statement that they swear they served the defendant). The free way to do this is to get a friend or family member who isn't part of the case to help you. The hassle-free professional way to serve court papers is to hire a process server and let them take care of it.
Taking the First Step in Your Lawsuit
If all of this work seems complicated or daunting, rest assured that it's easier than it initially seems. 2.7 million small claims court cases are filed annually in the US, which is only growing as more people realize how easy it is to enforce their legal rights in court.
Frequently Asked Questions:
What Do I Do if I Don't Have Proof?
- If you don't have proof that the other party owes you money, you may be faced with a difficult task getting the court to accept your case, or presenting your case during the hearing. Look for texts, emails, contracts, or witnesses to your deal.
Can I Sue a Company that Owes Me Money?
- You can absolutely sue a company in small claims court. It's not just for suing individuals. Remember to locate the business's name and registered agent with the secretary of state's online database to bring the lawsuit against them appropriately.