Thinking of suing in small claims? Start by sending a demand letter.Start Letter
When considering taking someone to small claims court for $500, you have to weigh your costs versus benefits to determine whether it is worth it for you.
In this article, we will cover the following factors to help you decide:
Cost of going to small claims.
Likelihood of winning.
Time and effort spent on your lawsuit.
Collecting your winnings.
Short Answer: Ultimately, even if you decide that small claims is not worth it for you, you should consider sending a demand letter as a way to try to resolve your dispute. We have a free tool powered by AI that helps you write a demand letter. Check out our demand letter tool.
Small Claims Court 101
Many types of cases can be filed in small claims court, and it isn’t uncommon to see someone suing for $500. While most courts don’t have a minimum amount you can sue for, all courts have a maximum amount you can sue for (on average around $10,000, but it varies by state, check out our 50 State Small Claims Limits Guide).
Here are some common types of lawsuits filed in small claims court:
Sale of defective products. Someone sold you an item that doesn’t work as advertised. For example, the other day I attended a small claims case where the person suing claimed they were owed $500 for a defective air conditioner they purchased on Facebook Marketplace.
Security deposit. Tenants suing landlords for unjustly deducting from their security deposit. These are one of the most common types of cases.
Unpaid loans. For example, you loan your roommate money, and they refuse to pay you back.
Car accidents. After a car accident, the at-fault driver or their insurance refuses to pay for the damage to your car.
Lost or damaged luggage. An airline lost or damaged your luggage during travel and won’t pay you.
Mechanics. For example, you take your car to a mechanic for repairs, and they damage your car while making repairs.
Breach of contract disputes. For example, you hire an artist to paint a portrait for $1,000, but they refuse to perform as per the contract.
The Cost of Going to Small Claims Court
Here are some factors to consider when calculating how much it will cost to take someone to small claims court:
Court filing fees. This amount varies by state and even by court but usually can cost anywhere from $10-$75. Some courts will waive your court fees if you are low-income. Some courts will also have the person you sued pay you for your court filing fees if you win.
Serving fees. After you file your small claims lawsuit, you will need to notify the other party that a lawsuit has been filed against them, this is called “serving.” The amount you will pay to serve your lawsuit will vary depending on the court you are filing in. On average, it ranges from $40-$125. To keep your serving costs low, you need to make sure you have an address where the other party can be found. Usually, you can serve where someone lives or where someone works, but this will depend on the state you are suing in. Some courts will also have the person you sued pay you for your serving costs if you win.
Time off work. Something to consider is that small claims hearings are scheduled during the week and during regular business hours. This means you may need to take time from work to attend your hearing, which is not always a viable option. Some courts do have night court, which, as the name implies, means hearings are held in the evenings and not during regular work hours. Many courts have also adopted virtual hearings making it more convenient to attend a hearing.
Legal Representation. Fortunately, small claims courts were designed so that you can represent yourself and not have to pay an attorney to represent you. In some states like California, they have even made it a requirement that you need to represent yourself in small claims court.
Likelihood of Winning or Settling Your Case
Your likelihood of winning or settling your case will depend on how strong your case is. Generally, many cases, including small claims, settle before the hearing. There are many reasons for this, but one of the main reasons is that you are not taken seriously until you file a lawsuit, even if you have a strong case.
You may be wondering how to know if you have a strong case or not? There is no straightforward answer to this question. However, a good benchmark is if you have evidence that supports your claim.
The evidence you need will depend on what type of case you have, but here are some examples:
Photos or videos. Photos and videos are usually very persuasive as evidence. For example, if you are claiming your neighbor damaged your property, having pictures of the damage and proof that your neighbor caused the damage would be pivotal.
Contracts or other written agreements. For example, your claim is against a moving company, and you are arguing they breached your moving contract by not showing up on the agreed-upon date. Your moving contract should have the date the moving company was supposed to show up.
Receipts. For example, your landlord refuses to return your security deposit because they say you didn’t clean the rental unit before you left. If you have pictures of the unit when you moved out, you would be able to prove to the judge how clean you left it.
Invoices. For example, you own a small contracting business, and you are suing a client for not paying $2,000 for services rendered. You will want evidence that you provided the service they hired you for and copies of the invoices you sent to the client with dates and a description of the services.
Continue Reading:5 Mistakes to Avoid During a Small Claims Hearing.
Amount of Time and Effort it Takes to Sue in Small Claims Court
Small claims courts were created to be the People’s Court. The processes are meant to be straightforward and easy. That said, it can still take time and effort to navigate court processes.
At People Clerk, we are on a mission to make the small claims process easy so that you can get justice. Ready for People Clerk to help you with your small claims lawsuit?
For some, the choice of taking someone to small claims court doesn’t come down to money, time, or effort. Small claims court is worth it when you know you are deterring someone from potentially harming others the same way they harmed you. You may also want to help others determine whether to do business with that person or corporation in the future, as court decisions are part of the public record.
There are many people who have gone to small claims court and felt like the process empowered them as individuals to seek justice.
Collecting Your Judgment
Your ability to collect after winning a small claims case should be a top consideration. Consider this, if someone owes you $1,000, and you know they don’t have money, is it worth going to small claims court? Probably not if the reason you are suing them is to get your money back.
You may also want to think again about suing someone who is a scammer, as they will be hard to find.
Nevertheless, many states allow you to:
Garnish someone’s wages if they have a job. This means each time the person receives their salary, a percentage of that salary will be sent to you to pay off the judgment. This option is not always available, as there are certain exceptions to when you can use wage garnishments, like if the person is low-income.
Placing a levy on someone’s property. This means you will be paid through the sale of the person’s personal property, which can include real estate, furniture, vehicles, etc.
Conclusion: Going to small claims court may be worth it for $500, but it will determine how you weigh your costs versus benefits. At a minimum, it is worth it to send a demand letter.
What is a Demand Letter?
A demand letter is a letter outlining a set of requests you would like the other person to fulfill. It also acts as notice to the other person that if they don’t fulfill your request by a certain deadline, you intend to sue them.
A demand letter can also be used as a way to start negotiations. Maybe you tried reaching out to the person you have a dispute with before, but they don’t take you seriously until they see a formal written demand letter. For example, you lent someone $2,000, and they won’t pay you back. You have reached out to them repeatedly only to be ignored, so you decide to send a formal demand letter stating your intent to sue. Odds are the other person is more likely pay attention to a demand letter than a text message.
Ultimately, deciding whether small claims court is worth it depends on how you value each one of the factors discussed above. However, we recommend that, at a minimum, you send a demand letter if you have a dispute against someone.
Here is a video on how our demand letter tool works:
Chief Legal Architect & Co-Founder @ People Clerk. Camila holds a law degree and is a certified mediator. Her passion is breaking down complicated legal processes so that people without an attorney can get justice.