- You can only sue for a small amount. The limits vary by jurisdiction. Some small claims courts have a limit as high as US$7,500, while others might have a ceiling of just US$2,500. There's no minimum limit. It all depends on where you live and it's a good idea to check to see where the limit is currently set in your small claims court.
- You can't hire an attorney to represent you. In small claims court, you show up and present your case and the other guy shows up to present his. Both of you present to the judge. It's not fun and it's not pretty.
- Just because you win, doesn't mean you'll collect.
- Small claims court fees: You have to pay a fee, usually to the court clerk, in order to file your case. Win or lose, you have to pay to file before anything happens. The cost probably won't exceed US$100, but it will be more than US$25, for sure.
- Summons service fee: Since you're not allowed to serve the other party with a summons to appear, there's a charge to have an officer of small claims court serve the summons for you. That can run you up to $US100.
- Lost wages: Assume you actually do end up in small claims court for a trial. You may not fork over any cash, but you also will have to take a day off work, pay for gas, parking and other costs. Even if you earn minimum wage, that's likely to cost you another US$100.
- Collection: Even if you win, how are you going to get your money? You can pay a sheriff to perform a "till take," where he literally stands at the other party's place of business and takes whatever cash comes in until he has enough to pay the judgment. But that costs another US$100 or so. Or you can give the judgement to a collection agency. But they'll only deliver 60% of whatever they manage to collect.
Online settlement services are like PayPal of small claims court. You do the whole thing online from any internet device -- for as little as US$19, total. By avoiding small claims court, you circumvent lawyers, judges, sheriffs and all the extra time and money it costs to simply get the matter over and done with. The online settlement service handles everything for both parties, calculating an amount that both find acceptable. It's faster, cheaper and takes just a few days, as opposed to a few months, while you go about your life.
Small claims courts are great, but they're expensive. Before you file, check to see if online settlement is better and faster for you.