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Small claims collection ROI
Decide whether to pursue a small claims judgment by computing expected net recovery — judgment likelihood, collectibility rate, and time cost.
Expected net recovery
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- Expected gross recovery$1,103
- Total cost (fees + time)$1,000
- Min collection rate to break even31.7%
Suing for $5k often nets less than you'd think
A small-claims judgment is a piece of paper. Collecting on it is a separate fight — and the win-rate is brutal. National average: 35% of money judgments are ever fully collected. The small-claims pursuit ROI depends on three multiplied probabilities that compound to <40% expected gross even on slam-dunk cases.
The expected-value formula
expected gross = amount × P(win) × P(collect)
expected net = expected gross − filing fees − (your hours × opportunity cost)When small claims pays off
- Documented debt against a person with W-2 wages (garnishment is reliable)
- Defendant owns real estate (judgment lien attaches automatically)
- Business defendant with active accounts (bank levy works)
- Defendant has reputation to protect (LinkedIn, public business)
When small claims is a trap
- Cash-economy defendant (subcontractor with no bank account)
- Defendant has moved out of state (foreign judgment process is brutal)
- Disputed facts with no documentation
- Amount under $1,500 — the time + filing eats the recovery
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