Represent yourself: here's how you can stay one step ahead in small claims court.

If you ever have to defend yourself in small claims court, it will pay to be ready. Diane Sumpter, president of DESA Inc., a management technical assistance firm in Columbia, South Carolina, was sued by a disgruntled former employee for $500. But since the suit was filed beyond the three-year statute, it was thrown out. Learning the procedures would have saved both parties time and money. Don't fall into that trap: learn the basics to put yourself ahead.

Find out if you have a small claims case. Small claims court is designed for disputes involving small amounts of money (from a few hundred dollars up to $5,000, depending on state limits) without long delays and formal rules of evidence. Claims involve purchases made by consumers, disputes over shared property, failure to honor contracts or invoices involving small business, investments that have gone under and expenses that employees accrued from employers, as in Sumpter's case

Check with your local county clerk's office. Rules for bringing a suit in small claims, called magistrate court, vary by state. The clerk can give you a copy of the local rules of procedure. Note that a small claims case has to be brought in the locale where the defendant resides.

Do your homework. You'll find good guidebooks to the statutes (the laws that apply to you) in your public library. A good start is Everybody's Guide to Small Claims Court (Nolo Press, $18.95). States vary on whether you can actually have a lawyer represent you in small claims court, but it generally makes a better impression if you represent yourself. Instead, seek out organizations for legal guidance. Contact the National Resource Center for Consumers of Legal Services, P.O. Box 340, Gloucester, VA 23061; 804-693-9330.

Anticipate the expenses. Nominal filing fees range from $10-$25. If you lose and wish to appeal, the fees increase to $25-$60. Generally, the person who files has to pay and the party defending does not. Other expenses can include time away from your job and mileage.

If you are the plaintiff, submit a summons or complaint. Most small claims courts give you a page or less to state your case, so just highlight the main points; describe the dispute, time, date and location, and names of witnesses. (Be sure to answer the who, what, where, when and how of the circumstances. See last month's article, "Handling a Civil Law Suit," for more pointers.)

If you are the defendant, you should prepare a response within 30 days. It does not have to be filed in written form, but you should be ready when it's time for court. If the claim is not true, you must deny it in no uncertain terms. If the basic facts are true, explain why you haven't made restitution. If you are counter-claiming for damages, this must generally be done when you answer the suit. Do not ignore a complaint, and be sure to file your response or counterclaim within the allowable time frame. Check local rules for the amount of time allowed to file; it varies by state. "The worst mistake that you can make is not answering a complaint," says Chief Magistrate Judge Walter Jones of Columbia, South Carolina. "If the suing party files a complaint and has attached all pertinent information (such as contracts or receipts), the judge can decide without ever hearing from you," he says. That is considered a liquidated complaint. If all information is not included, and you have not responded within the 30-day period, then you'll be found in default. Damages must then be determined and, under those circumstances, you can only argue about the amount of money, not the issues in the case or any offsetting damages.

When it's time for court, be prepared. Look polished, keep your cool and practice what you'll say. You should be able to give your testimony in five minutes or less. Bring any evidence that will bolster your case.

The final decision. A decision is generally rendered on the spot. Whatever the outcome, you have the option to appeal; however, if you do so it will be heard by a higher court, and you should get a lawyer to represent you.