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Your small claims lawsuit should be filed as soon as reasonably possible. And by 'reasonably possible,' we really mean as soon as you're sure you need to sue but before the time limit for filing expires. Besides the practical considerations of suing fairly quickly after something has happened, there are legal reasons to do so.
Statute of Limitations
All states and D.C. place limits on how late is too late to sue someone. This limit is called the statute of limitations, and it's a hard and fast legal rule. If George wants to sue Peter, and the applicable statute of limitations is three years, then George needs to file his lawsuit within three years.
There are, of course, some nuances here. The statute of limitations period can vary based on the type of case or claims asserted in the lawsuit. So a personal injury case might have a shorter statute of limitations period than a breach of contracts case, for example. There are also circumstances that can delay the start of the time period or extend it, such as if a wrong or injury is difficult to discover or a party is incapacitated and can't sue or be sued.
If either of these two situations might apply to your case, consider running it by a local lawyer.
A statute of limitations is the legal rule, and it's often a firm one. But there are other, practical, considerations for deciding when to go to small claims court.
You might be able to resolve the matter with the other party, avoiding the hassle of court proceedings. Sometimes the threat of a lawsuit, even a small claims lawsuit, can achieve results.
You might also need more time to gather up witnesses, documents like a contract or lease, and figure out if you have a case and, if so, what you're supposed to do next.
It's true that courts don't look favorably on cases filed after the statute of limitations has expired -- it's also true that they don't like unprepared cases either.