Collecting Accounts in Small Claims Court

You're done with the collection letters, the phone calls, and attempts at collection. It is now time for you to sue. In Kentucky, if the amount you're suing for is $1,500.00 or less, you can sue in Small Claims Court.

Getting Started: Go to the courthouse and find the Clerk of the Small Claims Court. Tell them that you wish to file a small claims case against the Defendant. (If you're suing to collect an account, you will be the "Plaintiff"-the one who complains-and the person you sue will be the "Defendant"-because he will have to defend himself against your lawsuit). They will hand you some preprinted forms to fill out. Basically, they will ask for your name and address, the Defendant's name and address, the facts of the case, and the amount you're suing for. You will have to pay a filing fee. Then, the Clerk will schedule your case for a hearing.

The Summons: Before your case can be heard, the Defendant has to be served with a Summons and a copy of your Small Claims Complaint. The Summons is an Order of the Court telling the Defendant where and when to appear for the hearing. The Complaint is the form you filled out telling the court why you're suing the Defendant, and for what amount. Service of process is usually done by sending certified mail or by a Deputy Sheriff.

Here's the problem. Defendants are not always easy to find for service of process. If you're suing the Defendant for non-payment of his account, chances are likely that he owes several other creditors, and that he's been sued multiple times. Defendants tend to hide from process servers. Even if they're not hiding from you, they tend to move around a lot. If you can't get them served with the summons and complaint, the case cannot go forward. In a prior chapter, I discussed the importance of collecting information on every account, just in case you need to skip trace. This would be a good time to have the name, address, date of birth, social security number, place of business etc. for your Defendant. The court may allow you to continue your case to get the Defendant served. You can then hire a "Special Bailiff" who can skip trace your Defendant and serve your papers.

The Inevitable Defense: You can do a perfect job for your customers. You can make their day and put a smile on their face. They'll tell you they're elated with the job, and that they're going to call their friends and family and tell them about what a wonderful job you did. Then they get the bill. All of a sudden, your work is shoddy, it is nothing like what was discussed, it is completely unsuitable, it has to be torn down and done anew. They will look through your contract or work order and pick out one thing that was left undone; and that was the most important part of this whole job! He might even file a countersuit against you. Be prepared when you go to court to show that you complied with your agreement. Bring pictures, if possible, or bring witnesses.

One thing you can do to head this off is to ask the customer to sign a formal acceptance and release at the time you complete your work. Many times these are printed at the bottom of a work order or contract. The customer signs and dates a statement that says that you have completed the work, that he accepts your performance under the contract, and that you have no further obligation under the contract. This will help you in court if there is any complaint about the quality of your work, or of the goods sold.

Bumping Out: You're suing for a few hundred bucks. It would cost too much to hire a lawyer, so you're going to handle it yourself. After all, if you win, you get your money; and if you lose, it's no big loss. So you file your lawsuit in Small Claims court. Within a few days, you get a 20 page formal "Answer" or "Answer and Counterclaim" signed and filed by an attorney. The court then informs you that your case can no longer be heard in Small Claims Court. You've been bumped up to another court.

This is a strategy for some Defense attorneys who are initially hired to defend a small claims case. By filing a countersuit in an amount over $1,500.00 they can have the case removed from Small Claims Court. Likewise, if they ask for a jury trial, the court will bump the case out of Small Claims Court-as there are no juries in the Small Claims Division. What does this mean for you? The procedure in the regular civil divisions is very formal. More than likely, you will need an attorney. Your case may be delayed for months in the regular civil court. You won't get the quick determination you would get in Small Claims. Furthermore, the Defense Attorney could decide to take your deposition (which may cost you hours away from your job and hundreds of dollars for a copy of the transcription), or he could burden you with pages and pages of discovery requests.

Be aware that even though you are filing in small claims court, you may find yourself in another court despite your intentions.

Your Day in Court: Finally, you will get your day in court. Typically, you will see that you are but one case on a busy docket. The judge will call up the cases one by one and hear them right there in court. The proceedings are informal. The rules of evidence and procedure are relaxed. The judge may take control of the proceedings and ask a bunch of questions to get to the heart of the matter.

You should dress neatly for court. Be clean, professional and courteous. However, you will only have a few minutes to state your claim against the Defendant. Be sure that you get out every bit of information that is helpful to your case.

Be prepared. Bring all your documents, witnesses, and photos to court. If you have a written contract, it's not going to do you any good if you leave it back at the office. The written contract is the core of your case. Any correspondence between the parties may help your case. You may not plan to introduce letters from the Defendant, but if he testifies to something that is contradicted by documents in your file, you need to produce the documents. Bring your entire file. Bring pictures if they are helpful. Bring witnesses if you can. Even though the rules of evidence are relaxed, having a witness present is very helpful in proving your case.

You should try to anticipate defenses that will be raised by your Defendant. However, be careful. Wait until the Defendant raises the defense before you address the defense. When you are putting on your evidence, don't try to expressly anticipate defenses as part of your case. After all, your defendant might not even bring it up. You don't want to give the Defendant any ideas on how to defend his case. You also don't want to put any seeds in the judge's head about weaknesses of your case.

After the proof is heard, the judge will decide the case. She will issue a written judgment. You will either win or lose. The judgment will award you an amount of damages which can either be all or part of what you were asking for. You will also be entitled to recoup your filing fees and court costs.

If you are unhappy with the judgment, the judge will tell you how you can appeal. However, it is rare that you will have a good appeal from Small Claims Court. These cases tend to be simple and fact dependent. The Judge has the discretion to make findings of fact. If the judge's determination is based upon "facts in the record", and in compliance with law, the trial judge's determination will not be set aside on appeal. For example, you have a he said-she said argument in your hearing. The judge has the authority to decide who is telling the truth and who is lying. She may decide that your Defendant is telling the truth. If her decision is based upon statements made during the hearing and/or evidence before the court then you normally won't be able to appeal that determination, even though you know your Defendant is lying. There must be a final determination of every controversy. Sometimes you win, sometimes you lose. Take your chances.