The state of New York handles commercial claims up to $5,000 in small claims court. Small businesses cannot often handle when a client does not pay their bills. After several rounds of trying to collect the bad debt, it may be time to move into small claims court.
The New York State Courts state a company can use small claims court only after sending a “demand letter first for consumer transactions.” The court can only be used five times in a month for commercial months for the entire state, not just the city. NYC only allows partnerships to file small claims, however, corporations can file one in the commercial small claims court.
The court has a processing fee and forms the company must fill out before the hearing. A company may have witnesses and expert witnesses at the trial. Come to the trial with all supporting documentation to prove the client does owe the debt such as bills, receipts, canceled checks, written agreements, photos and letters.
If the NY Courts issue a judgment in the business’ favor, the company often still has to find the money. The courts offer a variety of ways to find debtor funds such as using their canceled check for their banking information. Conduct a property search through the County Clerk’s office.
The court clerk can issue an information subpoena to help the company find the debtor’s information. An enforcement officer may still be needed to collect the owed funds. The process can be long making the cost of obtaining an attorney worth it for many business owners.