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IA Alternatives to Small Claims Court

Is a customer refusing to pay for repairs you made to her car? Or is a former landlord refusing to let you get some of your belongings that you left behind when you moved? These are the types of legal problems that are settled by the Iowa small claims court. It's a court designed to be a fast, informal and inexpensive way for people to like you to get the money they're owed or have their property returned.

Maybe you don't want to file a lawsuit, not even small claims lawsuit. You're not alone. A lot of people don't like courtrooms or dealing with the "legal process." There are alternatives to small claims court, however, such as:

  • Personal negotiation
  • Mediation
  • Arbitration

Any one of these tactics may help you get your money without having to step foot into a courtroom.

Personal Negotiation

Personal negotiation should be your first step, even if you're prepared to file a small claims lawsuit. All this involves is a simple phone call to the person who owes you money (he'd be called the "defendant" if you filed a lawsuit against him) asking that he pay what's owed to you. Be polite and cordial. Maybe you can work out an agreement that benefits everyone.

If your initial conversations aren't getting you anywhere, then consider writing a demand letter. It's exactly what it sounds like: A letter demanding that the other person pay you within a specific period of time, such as 15 or 30 days. To be effective, the letter should:

  • Briefly explain why you think the other person owes you money, or why you think you're entitled to the property
  • State exactly how much money you're demanding, or clearly describe the property you're after
  • Clearly state that you intend to take legal action, including filing a lawsuit in small claims court, if you're not paid or don't get the property in 15 or 30 days

If possible, send the letter by certified mail, return receipt requested. This requires the other person to sign for the letter when it's delivered to him. After it's delivered, you'll get the return receipt. Make sure you keep it, together with a copy of your letter, so that if necessary, you can prove later that the letter was in fact delivered.

Mediation

Mediation is an informal meeting between you, the other person, and a neutral third party, called a "mediator." Most of the time you'll meet together, but sometimes you and the other person will meet separately with the mediator. The mediator's job is to help you both reach an agreement. He can suggest different options to help you reach that agreement, and he may even suggest a particular way of settling the dispute, but he can't force or order either of you to do anything.

In most instances, mediation will be offered at no or little cost to you or the other person. Depending on everyone's willingness to negotiate and compromise, it can lead to a very quick settlement of your claim that makes everyone happy.

The courts like mediation, mainly because it saves time and helps clear the courts' busy schedules. In fact, in Iowa, if you file a lawsuit in small claims court, the judge will likely ask you and the defendant would like to mediate your claim. The case will go to trial only if either of you refuse or if you try to mediate but can't come to an agreement. If you come to an agreement, it will be sent to the judge. If he thinks it's fair, he'll sign it or "approve" it, and the agreement becomes the court's decision or "judgment."

Some Rules to Know

There are some things to keep in mind about mediation, such as :

  • Unless the agreement is approved by a court, mediation isn't binding, meaning that, even if you and the other person reach an agreement, the mediator can't enforce it. So, if the other person later breaks or "breaches" the agreement, you may need to start the whole process over again (personal negotiation, writing a demand letter, filing a lawsuit, etc.)
  • The mediator can't provide legal or personal advice. She can only suggest possible ways to settle the matter and help you both make sure that you reach an agreement that's good for you both
  • You and the other person make the terms of the agreement, not the mediator. The mediator will only write down or document what you've agreed to
  • The mediator doesn't make a "decision" in the case like a judge or magistrate would in an Iowa small claims court. That is, she doesn't decide who "won." Rather, she merely helps you reach an agreement
  • At any time, either party can withdraw from mediation
  • If you don't reach an agreement through mediation you can still file a lawsuit in small claims court. In other words, you don't waive your right to file suit simply because you agree to mediation. This is true for the other person, too, if he has a "counterclaim" against you, that is, he claims that you owe him money
  • Attorneys are usually not present during mediation. You can, however, hire an attorney to advise you about your claim, if you'd like

Arbitration

Arbitration is very similar to mediation. Here, a neutral third party, called an arbitrator, listens to both sides of the story, just like a mediator does, in the hopes of helping you reach an agreement. However, there are some important differences between arbitration and mediation:

  • If you and the defendant can't reach an agreement, the arbitrator will make a decision in the case, that is, decide if you're going to get paid and how much
  • The arbitrator's decision is binding, unless you and the defendant agree beforehand that it isn't binding. This means that it can be enforced by the arbitrator and, if necessary, the courts, if you or the defendant don't follow the decision
  • After going through arbitration, you can't file a lawsuit in an Iowa small claims court
  • Arbitration can be expensive. An arbitrator may charge over $125 for a four-hour block of time to listen to and decide your case. But, if you win, the costs of arbitration are usually added to the amount the defendant owes you

As with mediation, you and the other person have to agree to arbitration. However, you both also have to agree on the arbitrator. The clerk of the district court for your area may have a list of arbitrators that you may contact. Or, you can contact the American Arbitration Association for a list of arbitrators in your area.

Questions for Your Attorney

  • I can't get the defendant to answer my phone calls or letters. Is there any benefit to offering to mediate?
  • The defendant agreed to mediate my claim, but now he won't meet with or talk to the mediator. What should I do now?
  • How much will you charge me to file a lawsuit and represent me in small claims court? How do the costs of a small claims lawsuit compare to arbitration?
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