Is It Worth Going To Small Claims For $500?

  • Time to read: 5 min.

Answer: maybe. It depends on the claim and the reasons for suing.

In the article that follows, we’ll explain.

Is It Worth Going To Small Claims For $500? (Explained)

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What is Small Claims Court?

Small claims court is an alternate dispute resolution mechanism that most US courts run in their state courts.

While many individuals and companies suffer losses in the range of $1-$10,000, those dollar amounts do not rise to the level that it is worthwhile to hire a lawyer and go through the whole civil trial process to recover the money, as the lawyer fees themselves could easily cost more than is sought.

Most small claims courts make it easy for participants to file their own claims, and in many small claims courts, the parties are not allowed to be represented by attorneys.

Small claims actions are civil in nature, and not criminal.

Each state has its own laws that govern the cases that can and cannot be heard in small claims court.

For example, in Oregon,

  • the damages limit in small claims is $10,000
  • class actions cannot be brought in small claims
  • no attorneys allowed unless they are a named party
  • all actions for the recovery of money, damages, specific personal property, or any penalty or forfeiture can be filed in small claims, so long at the damages do not exceed $10,000

In California,

  • the damages limit in small claims is $10,000, though specific causes of actions may have lower limits
  • the court may grant equitable relief in the form of rescission, restitution, reformation, and specific performance, in lieu of, or in addition to, money damages
  • the small claims court has jurisdiction over recovery of money

It is best to check the local jurisdiction where the small claims action will be filed to confirm the max amounts that can be pleaded and whether any other restrictions exist.

Suing For Small Amounts (Small Claim)

If you ask an attorney, more likely that not, he’ll say that it is not worth it to sue someone to recover $500.

After all, the cost of filing a small claims matter is generally in the range of $50-$100, and then the plaintiff has to pay for the costs of service.

While some of those fees may be recoverable in the action, the small claim plaintiff would have to shell out almost as much money as he is seeking just to get the case in front of the court.

Not to mention the personal time invested by the plaintiff to learn about the process, fill out the forms, file the forms, arrange for service, attend court, and then try and collect on the judgment.

That being said, it is common for credit card companies and collection agencies to go ahead and file in small claims for small amounts (under $1,000).

The reason they can afford to do this is that they have a specialist trained to handle the proceedings, and they can file multiple cases at once, thereby spreading out the personnel costs.

But for the average citizen, suing to recover $500 is a losing proposition, when the costs of the case plus the time investment are factored in.

The losses are doubly worse when the judgment is not collectable (meaning the defendant doesn’t have the money to pay it), or the defendant subsequently files for bankruptcy and the judgment gets discharged without payment.

Suing For The Principle

Lawyers know that there are many reasons to sue.

Principle is one of them.

The $500 is owed, and it is right that the person who owes it, pays it.

The person who is owed the $500 may not end up $500 richer at the end of the case, but there may be other intangibles earned throughout the case that have value to the plaintiff including but not limited to:

  • establishing a public record that the defendant does not pay his debts
  • serving the defendant in a public place in a public manner
  • causing the defendant to have to prepare for the case
  • causing the defendant to have to appear in court and wait for hours for their turn
  • getting to tell a judge exactly how the defendant wronged him
  • getting to hear a judge conclude that the defendant was wrong and that the money is owed
  • getting an official court document confirming telling the world that plaintiff is right

For some plaintiffs, the investment of time and money is worth it if he can have some or all of these intangibles during the pendency of the case.

Most Attorneys Try and Sway Clients Away From Principle

While plaintiffs feel that the principle of the matter is important, most attorneys will try and convince potential clients not to sue for matters of principle.

There are several reasons for this.

First, once a case is filed, the plaintiff loses control over where it goes.

The court guides the case.

Second, the defendant may not go down quietly.

The defendant can file counterclaims which could cause the plaintiff to suffer public embarrassment, or cause the plaintiff to have to expend significant resources to handle.

Third, the judgment at the end might not feel like the plaintiff thought it might.

The principle of the matter ends up not being worth the money and time invested in most cases, and whatever dispute that exists between the parties continues.

Should You Sue For a Small Amount?

It depends on the person and the situation and what the individual seeks to gain from the process.

If recovery of the $500 is the only thing, then small claims might not be the avenue given the required investment of time and money.

But if the small claims process would provide other value to the plaintiff (like the chance to confront the defendant about the wrongs done to him), then the court process might be worth it.

What If You Need Help With a Small Claim?

While small claims is there to help people to recover smaller amounts without the assistance of an attorney, a plaintiff does not have to use small claims to get her relief.

Attorneys are often hired to assist with claims in the range of $100-$25,000, which may or may not fall into small claims court.

There may even be a way to recover the costs of the attorney fees.

Conferring with an attorney who specializes in civil matters, or even collections matters, could help an individual get some helpful guidance about how to proceed.

Wrap Up

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Is It Worth Going To Small Claims For $500