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Is small claims court the answer for you?

If you’re convinced that a somebody  owes you money – and you’re also convinced that you won’t be seeing that money any time soon – small claims court could be an option for you. By Laura T. Coffey.

Last week’s “10 Tips” column focused on how to complain effectively and get results. Many of you wrote in to say how valuable those tips were for you in your line of business or in your daily life.

Unfortunately, though, there are times when conflicts can’t be resolved through the process of filing complaints. If you’re convinced that a contractor, landlord or another person or business owes you money — and you’re also convinced that you won’t be seeing that money any time soon — small claims court could be an option for you to consider.

By taking your case to small claims court, you could resolve the matter quickly. But even if you win, it can sometimes be a real challenge to collect the money you’re owed. The following tips can help you decide how to proceed.

1. Understand what a small claim is. You must be able to assign a dollar value to your dispute and show you’ve suffered a monetary loss if you plan to sue in small claims court. Your claim cannot exceed a maximum dollar value, which varies from state to state. In some states, such as Arizona and Mississippi, the dollar value cannot be more than $2,500; in other states, such as California and Minnesota, it cannot exceed $7,500. The limit generally ranges from $3,000 to $10,000 in most states.

2. Do a cost-benefit analysis. Even if you have a claim for more than the maximum dollar value allowed in your state, it may be worth your while to go to small claims court rather than regular court. You'll be able to put the matter behind you more quickly, and you won’t have to spend money on attorneys’ fees.

3. Try to settle the matter outside of court. Particularly if you’re dealing with a neighbor or a local business owner near your home, it’s wise to attempt to resolve the situation informally first. If that doesn’t work, start writing letters to the person or company, and hang on to copies of all your correspondence. You also could try mediation instead of suing; your court clerk could direct you to a good mediator or mediation program.

4. Be diligent about record-keeping. Whether you decide to try mediation or appear before a judge, it’s important that you keep all relevant receipts, warranties, contracts, leases, repair estimates, paid bills, canceled checks and other supporting documents. If possible, set aside before-and-after photos of an item that was damaged.

5. Know what to expect. Once you file a complaint in small claims court, your dispute likely will be heard within a month or two, and the hearing likely should take 15 minutes or less. The atmosphere is more relaxed in small claims court than in regular court, but you still need to be thoroughly prepared to present your key evidence in a matter of minutes.

6. Be a spectator first. To help yourself feel calmer before your court date, sit in on some cases — ideally ones being heard by your judge. Notice how important it is to present the facts calmly and succinctly, and to clearly state how much money you’re seeking. Practice doing this aloud with someone you trust.

7. Remember the details. If you go to court and win, ask the judge to require the defendant to cover your filing costs, other court fees and fees associated with tracking down documents and witnesses.

8. Give yourself a reality check. You’ll be responsible for collecting the money you’re owed if you win. If the person you’re suing has no money, the small claims process could be a waste of time for you. And if you must resort to hiring a collection agency, you’ll lose one-third to one-half of the judgment amount.

9. You do have some recourse. If enough time goes by and the debtor doesn’t appeal the judgment and still fails to pay you, you may be able to obtain a court order authorizing a sheriff to collect the money. You also can have the debtor’s employer garnish his or her wages, and you can file a lien against the debtor’s property.

10. Seek out detailed advice. To find specific information about filing a small claims case where you live, click here and then click on your state’s Web site. You also may be able to find helpful information on your county’s Web site and at your local public library as well.