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How many times can one file in Small Claims for claims under $5000 or $7500?
Anonymous2 views2 answers
I loaned my company money and they have several accounts that are severely past due. Rather than hire a collection agency they assigned the debts to me in return for lowering their balance based on my recovery. There are about 8 accounts that would need to be taken to small claims. I'm reading something about there is a limit to how many claims one can file in a year. Is that cumulative?
Followup answer:
Cal. Code of Civil Procedure, Sec. 116.420 states that an assignee may not sue in small claims court. Thus, the claims assigned to you must be filed in a formal complaint in Superior Court, even though the balance is not that large. If you file these claims in small claims and the judge learns that these are assigned debts and not your own, there is a good chance the judge will dismiss your cases.
Instead, your company should have sued in small claims court under it's own name, and you as the employee can be the person responsible for filing the cases and appearing in court as the employee for the company.
The $7500 limit does not apply to corporations, only individuals. (See Cal. Code Civil Proc. Sec. 116.221.) The $2500 to $5000 restricts a plaintiff to two cases over $2500 per calendar year in small claims court. (See Cal. Code Civil Proc. Sec. 116.231.) Thus, the company may file two small claims up to $5,000 this year and two more next year and as many as it likes for $2500 or less.
The limits apply to each person or company which files lawsuits for its own debts. A debt collector may not file a claim in small claims court on a debt that was assigned to it by another company. See Cal. Code of Civil Procedure, Sec. 116.420. Thus, they will not sue you in small claims court. If they sue you, their lawyer will file against you in Superior Court--Limited Civil if the debts are under $25,000.
You will need a lawyer to defend, or end up getting a judgment, unless you can settle it. See my legal guide on , on settling debt collection lawsuits, how to settle them and what steps will protect you if you have a settlement and want to ensure proper court papers are filed.
