Is there a downside to a small claims suit?

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 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.


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