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  • Writer's pictureRay "Ordinary Dad" Magee

Cost Benefit Analysis in Filing a Small Claim

Today I want to talk about the Cost Benefit Analysis of filing a claim in small claims court. It is important to conduct this analysis before embarking on this journey. For me, the analysis was simple. I was out of pocket several thousand dollars for a new HVAC unit so I definitely needed to invest the time and resources to recoup some of the funds.


Here’s a quick definition and explanation of Cost Benefit Analysis:


A cost-benefit analysis is the process of comparing the projected or estimated costs and benefits (or opportunities) associated with a project decision to determine whether it makes sense from a business perspective.

Generally speaking, cost-benefit analysis involves tallying up all costs of a project or decision and subtracting that amount from the total projected benefits of the project or decision. (Sometimes, this value is represented as a ratio.)

If the projected benefits outweigh the costs, you could argue that the decision is a good one to make. If, on the other hand, the costs outweigh the benefits, then a company may want to rethink the decision or project.


So, let’s discuss some recommended steps on how to go about figuring out your analysis.


STEP ONE: Contact your local courthouse. Most courthouses have dedicated civil servants to answer your direct questions over the phone. You need to find out what are the forms you need to complete your claim. How much is the cost? In my case, I learned the cost was only $64 to file, but I needed to complete two separate forms. One form was called the Warrant in Debt and the other was called a Service of Process (more on those on a later blog). Before you spend any time actually going to your courthouse (which is another cost to calculate), try to complete as much of the form from your home as possible. The last thing you want to do is have multiple trips to the courthouse because you did not complete a form correctly.


STEP TWO: Now that you have some basic information you need to establish some goals and objectives. You want to clearly ask yourself what you consider success. To be fair, for me I am pursuing a very expensive claim, so anything less than full restitution is unacceptable. But that’s my standard. If my claim was only for a couple of hundred bucks I would just write a complaint to the BBB and call it a day. But the size of my complaint and the extremely aggressive response from Cinch Home Services caused me to not only pursue a claim, but start this blog. Success for me is two-fold:

1) Full restitution

2) Help others hold Cinch Home Services accountable as a home warranty provider


STEP THREE: Your next step is to sit down and compile two separate lists: One of all of the projected costs, and the other of the expected benefits of the proposed project or action.

Costs may include:


-Costs to file any necessary paperwork. In total I have spent $76 to date.

-Costs to print and mail any relevant paperwork. In total I have spent about $25 to date.

-Any legal costs. You don’t really need to spend money on an attorney as you can seek low-cost legal aid through local resources or if you have a general practitioner lawyer in your network, then ask them relevant questions. But keep your legal fees low. Cinch Home Services will have to pay large legal fees to defend the claim against you, so let them spend all of your monthly premiums on their defense.

-Opportunity Costs. You will really need to figure out whether the opportunity cost of filing a claim is worth doing anything else, like living your life in peace. For me, I wanted to learn more about the legal system and recoup the funds Cinch promised me so it was a no-brainer. But your opportunity cost may be different.

-Any other indirect costs. Costs like gas, babysitter, taking time off of work to go to court will all play into your decision and analysis. So factor your costs carefully.


After you figure out the sum-total of your projected costs, write out a list of all the benefits you will receive. Here is my Sample List:

-Reimbursement of HVAC: $10K+

-Learning the full legal process of the small claims court: $5K

-Learning how to start my own blog: $10K

-Going to court and conducting independent research: 40 hours

-Holding Cinch Home Services accountable: Priceless


Your two lists will look different from mine, but ultimately your goal should be to determine from your own perspective if it’s worthwhile to pursue a claim. As you can see, my projected benefits far outweigh my costs so I am pursuing my claim aggressively. I do not encourage you to pursue your own endeavor lightly as it will be extremely challenging. But if you do decide to file a claim, then I wish you good luck on your endeavor.

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