If you've been sued in small-claims court, you'll be required to attend a hearing where you can explain your side of the issue. The court will render its decision based on testimony and evidence and find for the plaintiff -- the individual who files the claim -- or for you, the defendant. A decision for the plaintiff will, in most cases, result in a money judgment against you. Neglecting to meet this legal obligation may give rise to one, or several, financially unpleasant events.
A small-claims decision that goes against you results in a legally enforceable judgment. The clock then starts ticking on payment; the length of the deadline varies with the state law governing small claims cases. In California, for example, the debtor has 30 days to pay either the court or the creditor. In the meantime, most states allow you to arrange an installment agreement or file an appeal of the decision.
If you don't pay the judgment, the creditor may start any and all legal collection actions. These go above and beyond letters and phone calls; with a judgment in hand, a creditor can request a writ of garnishment from the court and have a portion of your paycheck seized. Alternatively, the creditor can file a lien against your home, which requires you to satisfy the lien amount before you can collect any proceeds of a home sale. Bank levies can also drain funds from your accounts, with some exceptions for Social Security benefits, pensions, disability income and a few other payments -- and as long as you've separated these income types from nonexempt money, such as wages.
Fortunately, outstanding debt is no longer a prosecutable offense, and small-claims courts don't have the authority, on their own, to seize money or property. If you don't pay a judgment, it's up to the plaintiff to file the necessary paperwork, pay the necessary fees and pursue collection. Interest and court costs, however, will be accumulating in the meantime. Judgments are generally valid for at least five years, with the option to renew, and can be filed in another state if you should move.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.