Is there a rule of thumb for the economics of a lawsuit?

Your question is a very good one, but nobody can answer it for you.  The following are some of the things you should consider. First of all, almost all loan documents provide that the full amount of the debt (minus any amount already paid and any unaccrued interest) becomes due upon default, so that, if you win, you should get a judgment for the full amount.  There may also be a provision that the loser must pay the prevailing party's reasonably attorneys' fees, which could help you recover at least some of your expenses, if you win.  Also, if, as  you say, there is absolutely no merit to any counterclaim, most jurisdictions have mechanisms for recovering attorneys' fees from someone who brings a frivolous claim, whether it be by a claim for malicious prosecution or court sanctions.  I caution you, however, that a frivolous claim does not mean just that you believe that your version of the facts is the true one. All that being said, Courts do not often award attorneys' fees, and even when they do they are likely to award less than the actual amount spent.  Litigation often costs a lot more than $88,000, and is often very time consuming.  Often it is not worth litigating a matter to its conclusion over such a relatively small amount.  You should remember, however, that the other side faces costs and risks as well, and litigation is usually settled before trial.  Any litigation works on several tracks - you have to consider how to win your case if it continues, while also considering how to maximize your leverage to negotiate the most favorable settlement.  Starting a case may give you more negotiating leverage.  Also, your costs for simply starting a case should be low, and you can drop it if you find it is costing too much.  If you really have nothing to fear from a counterclaim, you may have little to lose.  Apart from personal emotional considerations which influence many people (e.g. how bad will you feel if you let this person "get away with it" and don't "stick up for yourself"), you should also consider whether allowing this default to stand unchallenged can affect you moving forward.  Many businesses find it beneficial to assert every claim, even if it's too small to be cost effective, in an attempt to discourage others from trying to take advantage of them in the future. You should also consider if there is a way to reduce your costs.  Given that you feel that your case is very strong, there may be attorneys who are willing to handle it on a contingency basis, thus limiting your out of pocket exposure. Last, but definitely not least, you have to consider whether the debtor will be able to pay you even if you win.  It does no good to spent time and money litigating, only to be awarded a judgment which the debtor is too broke to pay.  Some debtors may even be able to file bankruptcy and have the debt discharged.