Chasing down an unpaid invoice can often feel like finding a needle in a haystack.
When you’ve completed the work, shipped the order, or done the good-faith work, the last thing you want to do is deal with an unpaid invoice. If the person has failed to respond to your requests and collection efforts, Small claims for an unpaid invoice might be the best way for you, the freelancer, entrepreneur, or business owner. This legal solution may work for you.
Small claims court gives you easy access to justice and the ability to get your money back quickly without doing a dog and pony show with expensive attorneys. Here is some information about suing for small claims: what it’s all about, when to do it, and how to increase your odds of success.
What Is a Small Claims Court?
“Small claims court” is a legal term that refers to a specific type of court that generally calls itself a “small claims division.” This type of court hears civil cases in which relatively small amounts of money are at stake. The exact threshold that distinguishes cases in this court from cases in other courts will depend on the law where you are, since each state (and some countries) can set the limit wherever makes the most sense for their legal system. In general, the amount of money you can file a lawsuit for in this kind of court falls between $2,500 and $25,000, based on the state.
When you appear in this court, you will likely do so yourself (without a lawyer). The other rules are often less formal, so it is not as intimidating as many regularly seen versions of court. The most important departure is that the judge’s decision will generally not be made based on the typical rules of evidence that apply in full trials, but will still be legally binding.
When Should You File a Small Claims for an Unpaid Invoice?
You should consider suing in small claims court if:
- You’ve tried to collect payment with no luck.
- The client can’t or refuses to pay, or has no valid reason for not paying.
- The total invoice amount is within your local court’s small claims limits.
- You have supporting evidence proving an agreement, and the other party received the delivered goods.
For example, missing freelance payments, incomplete payment plans for delivered goods or services, or noncompliance with a short-term contract.
What Happens After the Hearing?
If the judge rules in your favor, you will receive a judgment that the other side owes you a certain amount. However, that is only one part of the process. If the defendant doesn’t pay voluntarily, you will collect through wage garnishment, bank levy, or property lien, depending on your state or the defendant’s location.
Advantages of Small Claims for Unpaid Invoices
- Affordable: Lower filing fees and no need for an attorney.
- Faster: Disputes are resolved more quickly than civil cases.
- Accessible: Regular people and small businesses can have a say in their own legal battles without being a lawyer.
- Enforceable: A court-ordered judgment is enforceable, making further collection efforts easier.
Filing Small Claims for Unpaid Invoices
Having outstanding unpaid invoices can be debilitating to your business. However, you don’t have to just sit there and take the financial hit without a remedy. Learn how to file a small claims for an unpaid invoice and take back what’s rightfully yours. With the right documents, preparation, and attitude, you can make small claims court work for you by holding your client accountable for their debt.
