Should I Sue This Debtor?

You should not file a lawsuit every time somebody fails to pay you some money that they owe you. Ridiculous example – We are at lunch and I ask you to lend me five dollars for a sandwich, and tell you that I will pay you back. I don’t pay you back. You wouldn’t sue me – you just wouldn’t lend me any more money.

Here are some questions you should answer before you think about filing a lawsuit.

  1. Is there enough money at stake? Even if you handle the case yourself, it seems like $500 is about the minimum where it makes financial sense to file a suit. If you’re going to get a lawyer involved, $2000 is about the minimum where someone would take the case.
  2. Is the debtor still around? Sometimes the reason you don’t get paid is that the debtor has left town or has gone out of business. One of the big issues is whether or not you or your lawyer can find a good address on the debtor so he or she can be served with the lawsuit.
  3. Does the debtor have anything you can collect from? South Carolina is a debtor friendly state in that there is no wage garnishment for debt collection and there are numerous exemptions that shield a debtor’s possessions from collection by creditors. Unless you are just suing as a matter of principle, it is worth knowing whether the debtor has any assets from which recovery can be made.
  4. Will the debtor file a counter suit? Even if your lawyer agrees to pursue your claim on a contingency basis, if the debtor counterclaims against you for such things as quality of product or nonperformance of your duties under the contract, your lawyer will want to be paid by the hour for defending the counterclaim. If the debtor has already threatened to sue you if you sue him, you ought to assume that he will make good on his threat and that this will cost you more money.
  5. Do you ever want to do business with this debtor again? Many times the answer is no. But if you ever hope to do business with this debtor in the future, suing them will pretty well guarantee that won’t happen.

Good lawyers ask these questions before ever agreeing to take your case. Don’t get mad at them – they are just doing their job.

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