If you are sued in the Ontario Small Claims Court the first thing that will happen is you will be served with a Plaintiff’s Claim. Once you are served with the plaintiffs claim you have an opportunity to file a defense.
If you fail to file a defense the other party could obtain default judgment against you. If you file a defense the matter will proceed to a pretrial settlement hearing and if no settlement is reached it will then proceed to a trial.
The only time something will report to your credit report is if the other party is successful obtaining a judgment against you. This can only be achieved three ways:
1. You dont file a defense and the court awards the other side default judgment.
2. You make a court approved settlement and default on the terms.
3. At trial the judge agrees that the other side is right and awards them judgment.
You have more to worry about than just your credit report if someone obtains a judgment against you.
Once the other side has obtained a judgment they can file a writ of execution with the Sheriff’s office. Any time a mortgage is closed in Ontario the lawyer, as a condition will run and execution search on the applicants name. Any executions that appear will have to be paid before the consumer is able to close their mortgage.
If the other side uses their judgment to obtain a notice of garnishment they can send the garnishment to your employer and then your employer will have to remit 20% of your net earnings to the Ontario Small Claims Court to be paid to the other side.
They can also use the judgment to freeze your bank account which involves notifying your bank that you have an outstanding judgment against you.
The Ontario Small Claims court offers a comprehensive process to help parties make fair settlements when they involved in a dispute.
If you have just been sued, even if you believe that you owe the money you may want to consider filing a defense. When filing a defense you can dispute the entire amount claimed, or admit that you owe some or all of the amount claimed and propose a repayment plan. Then when you go to the pretrial settlement conference you have an opportunity to propose a repayment plan to the other side in front of a judge or referee.
If you are able to come to an agreement, the judge or referee will bind the settlement and no judgment will be entered against you as long as you honor the terms of the settlement. If you breach the terms of the settlement, the other side will be eligible to apply for default judgment and you will have no further remedy.
For more information please visit www.easycourt.ca.