If I were in this position I would probably look into collections agencies before small claim. If someone threatened me with small claims I may ignore it as I would think the process would be too much of a pain for someone to actually follow through with. The gain would be less then the expenses to file. (time off work etc.) If someone threatened me with collections, that would hurt my credit rating and for that I may react differently. It seems more realistic for someone to put me through collections then spend a whole lot of time on small calims court.
Just my thoughts.