Many creditors with claims under the $5,000.00 small claims limit are availing themselves of the procedures available under Missouri law in the Small Claims Court, which is a division of the Circuit Court.
While the procedures are fairly simple and the filing fee is less than that charged for a regular Associate Division suit, there are many procedures that are not available for use with a judgment rendered in Small Claims Court.
- No Discovery: You cannot ask for documents, send interrogatories or take depositions to find out if the defendant has any possible defenses.
- Trial de Novo: If you win the trial the defendant is entitled to an automatic new trial without stating why, which means you may have to try the case twice
- No Post Judgment Discovery: Winning the trial does not entitle you to conduct a Debtor’s Exam. This is a process that allows a judgment creditor (anyone who is owed money by order of a court) to make the debtor answer questions in a post judgment deposition about his or her assets, like jewelry, cars, stocks, bank accounts, valuable memorabilia, etc…
- No Attorney Fees: If you do not have an attorney represent you in small claims court you cannot get attorney’s fees even if there is a provision in your contract or note to this effect
- Limited Number of Cases: Creditors are limited to 12 cases per year
The small claims procedure should only be used when the claim is very small and the creditor has a readily accessible way to collect, such as through a wage or bank garnishment. Garnishing wages or levying on other property of a debtor such as a car cannot usually be accomplished without an attorney. A lawsuit in the Circuit Court, Associate Division with an attorney representing the creditor provides the full spectrum of remedies available under the law.
While it is true that collections activities must end once a debtor files bankruptcy, it does not necessarily mean the opportunity to collect debt has been removed. In bankruptcy cases where there are assets to distribute funds, the creditor may file what is called a Proof of Claim. Essentially, a Proof of Claim is a written statement that notifies the bankruptcy court, trustee and other interested parties that a creditor wishes to assert its right to receive a distribution (pay out) from the bankruptcy estate.
There are deadlines associated with filing a Proof of Claim and objections to a Proof of Claim. A Proof of Claim must also conform with official bankruptcy forms and include information such as who the debtor is, the bankruptcy case number, who the creditor is, amount owed, basis for the claim and if the claim is secured or unsecured.