The role of small claims courts is to pass county court judgements in matters which affect individuals or a locality. More often than not this means financial disputes which have arisen between individuals or with companies and customers. The court will make a ruling on what money is owed and sometimes, as a part of the judgement, will dictate payment terms.
County court judgements tend to be used by financial organizations when they have customers who are no longer sticking to the terms of whatever product has been taken out. These judgements are a tool to ensure that companies can have stronger force in collecting dues when more consultative approaches are unsuccessful.
If someone receives a notification of a pending judgement they will be required to agree with what is being said, argue that the details of the case are wrong, or try to arrange a more friendly and less official manner of settlement. In most cases though, these more amicable methods will have been tried before going through the courts.
If a judgement is successfully placed then this will remain on a person’s record for a period of 6 years following its settlement. This is likely to affect any other applications made for credit and other financial services.
It is worth noting though, that not every company will look at a person’s credit file in the same way and just because one organization has decided that an applicant is not strong enough to have finance approved, it doesn’t mean that every other company will decided the same.
Companies will use this method of enforcement sparingly, not only because of not wanting to lose a customer, but also because of the cost and time involved in putting these cases through. More often than not, there are alternative methods available for settling disputes or chasing down inconsistent payers.
There is, however, now the option to register online in some countries, like the UK and certain states in the US, to process claims and this had made the whole process much quicker and more streamline. Concerns have been raised over the increased use of this process now that it is much easier but as yet there has not been comment on such a fear coming into fruition.
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