Bounced checks? Unpaid invoices? As an entrepreneur trying to grow your small business, chasing down non-paying clients for money owed is one of the last things you may want to be doing. However, it sure would be nice to collect already! Filing multiple small claims against customers who have skipped out on paying you is one way to get money owed, but takes time and persistence. Hiring a local process server to help can be a cost-effective, time-saving solution.
In small claims court, you usually don’t need an attorney and you usually get a hearing within one month after filing. Depending on your state, the maximum amount you can sue for ranges up to about fifteen thousand dollars (Five thousand in Wisconsin). Check your state laws to determine the maximum amount you can get from a small claim. Sometimes it’s a good idea to get judgments for the maximum limit even though some customers owe more than that. Again, this is because you wouldn’t have to pay attorney fees for large claims cases, only the court’s filing fee. In most small claims courts, total fees are less than a hundred dollars.
But the idea of waiting in line at the courthouse for half the afternoon takes away from everything else you could be doing to help your business towards that bottom line. Especially if you have multiple claims to file and get served. Besides, the time and energy you might spend attempting to get paid what you’re owed can’t be recovered. And we all know that time is money! So if that doesn’t sound like very much fun, consider hiring a local process server to be your “small claims department.” Most process serving firms will file locally for no additional fee. They go to the courthouse routinely anyway, so let them do it! And most of the time there is little or no fee to do this assuming they are serving the paper for you.
You would still need to fill out your small claims forms by yourself. They are not complicated, but by law, only you, yourself, can fill them out. If you don’t want to do them yourself, only an attorney or a licensed legal document assistant can do it for you. Once your forms have been completed, you can prepare the appropriate court fees and pass the job off to your professional process server. At that point, they will open your claim with the court, which will set your hearing date out approximately 20-60 days (depending on the state) in advance and autenticate/stamp the documents. Then, they are ready to be “served” on the defendants, and the process server will begin delivering the papers to the defendant’s addresses.
However, if some locations of your non-paying customers turn out to be invalid, or you don’t know where they reside, the legal process server can assist in finding them with postal checks with the USPS, online database searches and skiptracing tactics.
After your small claim orders have been served, the process server will prepare “proof of service” (aka affidavit)forms and file them with the court (if applicable). All you have to do is show up for your hearing dates. Meanwhile, some of the non-paying clients might begin contacting you to settle. After all, being served with a lawsuit usually gets most people’s attention. Another possibility is that some defendants simply won’t appear in court. When that happens you will most likely receive a default judgment in your favor, as long as you have proof of money owed. And finally, some defendants will appear in court, in which case you should be prepared with proof that they owe you for products and services provided. At this point, you may wish to negotiate and settle on the spot.
If you get some judgments in your favor however, it does not automatically guarantee that you will recover what you’re owed.
Depending on your state, the debtors usually have about ten to forty-five days to pay up or file appeals. If they fail to do either, there are several resources available to you, and your process server may be able to assist in these procedures as well.
If the debtors own property you may be able to file liens on them. When the properties are sold, you’ll be paid out of the proceeds. You could also have your process server serve earnings garnishments and bank levies. If the debtors have jobs, bank accounts, or income from rental properties, you may be able to extract payments from those sources. Not all states allow wage garnishments (Wisconsin does), so check your local laws.
Even if you can’t recover money owed immediately, sometimes it’s still a good idea to get judgments anyway. Depending on your state, judgments are good for five to twenty years and are renewable. Chances are good that you could get paid before the judgments expire anyway, because the debtors may want to make financial transactions or apply for jobs that require credit checks. They won’t want unpaid judgments showing up on their credit reports.
Again, a competent, private process server will be able to do the majority of the legwork in collecting money for you through the small claims process. However, a process server is not an attorney and cannot advise you.
To pursue losses in greater amounts outside the jurisdiction of small claims court, it is advisable to contact an attorney.