If someone owes you money, you can try to reclaim that money by taking things to small claims court. This can be an effective debt collection strategy, but success isn’t guaranteed and it comes at a price.
What is Small Claims Court?
In England and Wales, as you might expect from the name, small claims court is intended for relatively minor disputes and claims. The small claims court process is for simple cases that don’t involve a large amount of money or complicated disputes. There are a variety of cases that can be taken to a small claims court – for example, claiming for a faulty product or landlord problems – but a lot of the cases are to do with someone being owed money.
You can claim up to £10,000 from an individual, company or business in small claims court. This could be because you haven’t been paid for freelance work that you have done, because someone hasn’t paid for goods or because someone hasn’t repaid money they borrowed from you. You will need to prove that the money is owed and it’s the debtor that owes it but, largely speaking, the majority of small claims can be taken to court. You won’t be able to pursue a larger claim via small claims court, as the process is slightly different.
Budgeting for Small Claims Court
Before you go to small claims court, you need to think about the cost of doing so. There are fees involved with the small claims court process, especially if you need legal help or the assistance of an expert. There is no guarantee that you will win at small claims court, which does mean that you might be left out of pocket if the judge doesn’t decide in your favour. This is why a lot of people choose to use the services of a debt collection agency.
Potential Cost of Small Claims Court
If you are claiming money from a debtor in small claims court, the cost of doing so is determined by the value of your claim. The larger the amount, the larger the court fee. For claims up to £300, you should expect to pay £35. This increases to £50 for claims up to £500, £80 for claims up to £1,000 and £120 for claims up to £5,000. For larger claims, the fee is calculated as a percentage of what you are claiming for. If you win in small claims court, your court fee will usually be included in the amount that the other party has to pay you.
There is no denying that taking a debtor to court can be costly, especially as there is no guarantee that the debtor will be forced to pay what they owe. This is why a lot of people choose to use a debt collection agency. At Cobra Financial, we are on hand to help you recover funds that are rightfully yours.