Is there a downside to a small claims suit?

UPDATED: Oct 21, 2011

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Is there a downside to a small claims suit?

I’m intending to sue my mortgage servicer in small claims court over charges and fees due to a failed mortgage modification under the HAMP program. The charges amount to a little over $1,000. The servicer is one of the biggest of the “Too Big to Fail” banks. I intend to charge them with mortgage fraud, misappropriation of funds, harassment, misrepresentation, false reporting to a credit agency, malfeasance, and the fact that they breached their fiduciary responsibility to virtually every party involved. I also charge that they did not deal with me in good faith and that they resisted my offer to settle early on because they would not put me in touch with someone with the authority to make a settlement. I am just trying to find out if there are unintended or unforeseen consequences to me for filing. Is there a downside I am unaware of?

Asked on October 21, 2011 under Real Estate Law, Arizona


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Besides the expenditure of your time--which could be substantial--and the minimal court fees, there are two main possible downsides:

1) If any of the claims you propose are ones which are not filed in good faith--and regardless of your subjective belief as to their validity, if there is effectively *no* evidence to support them, they might be considered to be made in bad faith--it is possible you could be ordered to pay the bank's legal fees for opposing those claims. That could be a large number.

2) To presecute the claims properly could require you to  go out of pocket for substantial sums. For example, you might have to depose bank employees, which you'd pay for; you may need to copy alot of documentation. Even though you are only intended to sue for $1,000 or so, you are actually describing somewhat complex, evidence intensive litigation.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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