Since 1992, the maximum amount of a claim eligible to be filed in the small claims division of the district court has been $1,750. MCLA 600.8401; MSA 27A.8401. As of January 1 of this year, that amount has been increased to $3,000. 1999 PA 27, Eff 1/1/2000.
Generally, the procedure for making a claim in small claims court is by filing an "Affidavit and Claim-Small Claims", with the district court clerk, along with one copy for each defendant to be served. MCLA 600.8402(1); MSA 27A.8402(1). We have attached a copy of the "Affidavit and Claim-Small Claims" form as Exhibit A to this article. By filing the affidavit, you waive your rights to an attorney, to recover more than the $3,000 limit, to a jury trial, and to appeal the judge's decision. Form DC 84 (12/99).
The debtor's response to your claim will determine how (and whether) your case will proceed in the small claims division. If the debtor appears, refuses to submit to small claims jurisdiction, and files a "Petition and Order for Removal - Small Claims", your case will be removed from small claims court, and transferred to the local district court. MCLA 600.8408(4); MSA 27A.8408.(4). The debtor must then file an answer within 14 days of the transfer order. Because transferring the case to district court increases the limit on the amount of your claim to $25,000, you may amend your pleadings to increase the amount claimed. MCLA 600.8301(1), MSA 27A.8301; MCLA 600.8425(2), MSA 27A.8425(2).
The debtor may also appear, admit liability, and sign a consent judgment. In this case, the debtor may ask the court to allow installment payments rather than requiring payment in one lump sum. MCLA 600.8410; MSA 27A.8410.
In addition, the debtor may appear, contest the claim, and agree to a small claims "trial." A small claims "trial" is an informal hearing in which witnesses are sworn, testimony and documents are presented, and the judge renders a decision. MCLA 600.8411; MSA 27A.8411.
Alternatively, the debtor may fail to appear. If the debtor is properly served, you are able to prove a proper claim, and the debtor fails to appear, the court will enter a default judgment in your favor for the amount claimed plus costs. Michigan Court Rule 4.304(B).
The increased limit will allow you to bring claims in the small claims division of the district court for amounts up to and including $3,000. Such amounts may include, for example, debts you have been unsuccessful in collecting, amounts you have charged off, or overdrafts on a closed deposit account which were never recovered.
If you currently have one of your employees (not a lawyer) file claims and appear on your behalf in small claims court, you may now do so for claims of up to $3,000. This is a relatively inexpensive method of attempting to obtain a judgment for the amount the debtor owes you. If you have never pursued a claim in small claims court, you may contact the small claims division of your local district court for instructions on how small claims are processed. Although generally a court clerk will not provide such information, the state court administrator is required by statute to prepare instruction sheets clearly explaining how the small claims division functions and how to commence and defend an action in the small claims division. Copies of these instructions must be made available at the office of each clerk and deputy clerk of the district court. MCLA 600.8401a; MSA 27A.8401a. The form used in Cheboygan County is attached as Exhibit B.
As always, we will keep you informed of further developments.