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Should I go to small claims court?

Dear Dr. Don,
Several years ago I gave a personal loan ($6,000) to a friend to start her small business. Nothing was put in writing, but the loan was mentioned in a letter that I received from her. I have the canceled check along with copies of most of her payment checks. The problem now is that it has been almost a year since I received any payments from her and she still owes me $1,000. Can I take her to small claims court and recoup the remaining monies owed to me?
Jeff Jurisprudence

Dear Jeff,
You've got enough documentation to take her to small claims court, but have you tried talking to her first? The judge is going to want to know what steps you took prior to taking this to court to settle this claim. Negotiation and mediation are both alternatives to filing a claim in small claims court.

The Web site of the Clerk of Courts for Palm Beach County, Fla., provides the following suggestions:

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When considering whether you should file a lawsuit, you should ask yourself the following questions:

  • Have I tried all possible and/or reasonable means to reach a settlement?
  • Do I have, or am I able to obtain, the necessary evidence to prove my claim?
  • Do I know the correct legal name and address of the defendant? can help you find the small claims court that will hear your case while the U.S. General Services Administration provides this overview to filing a small claims case.

Depending on where you live, the statute of limitations on an oral agreement may have run out. In some states, it's as short as two years while in others it runs for 10 years. Talk to her first and try to arrange a schedule for her to pay this remaining debt.

-- Posted: Nov. 17, 2003

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See Also
My friend thinks I'm a bank
Loaning money to a family member
Financial advice glossary
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