In this economy, I hear this question more and more frequently from business owners. They have clients for whom they provide a product or service and then they can’t seem to collect on what’s owed to them, no matter how many invoices marked “Overdue” or “Past Due” they send.
If you’ve reached the point where you need to do something more than sending invoices, what I suggest is filing a claim (or claims if you have more than one client who owes you money) in the local Small Claims Court. Small Claims Court is for claims under $7,000. And, you don’t need to hire a lawyer to represent you – it really is a place that you can represent yourself like you see on the “People’s Court.”
To file a case, you just need to go to the District Court for the area where either your business is located or where the debtor lives. For a list of District Courts and the Counties that they serve, just click here.
The filing fee for small claims of $500 and under is $40. The filing fee for claims of $501 to $2000 is $50. The filing fee for claims of $2001 to $5000 is $100. The filing fee for claims of $5001 to $7000 is $150.
You begin the case by completing the “Statement of Small Claim” form with the amount you are suing for and a description of your claim. You must state specifically any amounts sought for damages, for multiple damages or statutory penalties, for attorney’s fees, or for costs, as well as the total amount being sought.
You must have the defendant’s correct name and mailing address. If you are suing a business that is not a corporation, you should name the owner as doing business (“d/b/a”) under that trade name. You may obtain its name from the City or Town Clerk where the business is located. If you are suing a business that is a corporation, you must have its exact legal name. You can find this information from the Corporate Records Division of the Secretary of State’s Office.
Once you file your completed form, the court will then send a copy of the Statement of Small Claim to the defendant by first class mail. If the defendant lives out of state, though, he/she will be served a copy by certified mail.
Attorney Andrew Garcia, your SouthCoast Business Attorney, is a principal of Phillips Garcia Law. He’s created a Business Legal Planning system that will walk you through the process of forming your Massachusetts corporation. Locally he has appeared live on WBSM-AM radio and nationally on NBC’s Today Show and Fox’s Fox & Friends program. If you are interested in learning more about his Business Legal Planning services, just contact him at email@example.com or by calling (508) 998-0800.