Terry Merrifield recently hung up his handcuffs after 11 years as a deputy U.S. marshal to form his own company, anticipating a Reagan administration move to take the deficit-ridden process of serving civil court papers away from the U.S. Marshals Service and put it in the private sector's hands.

Since then he has had his adrenaline-pumping moments as, in the pay of private lawyers, he tracked the unwary and the uncooperative with official court notices, subpoenas and summonses. He has jumped from behind bushes and posed as an exterminator. He has been threatened with cocked fists. In one process-serving coup, he said, he bought long-stemmed flowers and gained entry to a Northwest Washington high-rise as a delivery man.

"You got me," said the startled woman who answered her apartment door after weeks of avoiding a subpoena.

Merrifield, who once guarded some of the country's heavyweight crime figures while assigned to the U.S. Witness Protection Program, relishes the work.

But trying to make it as a Reagan-inspired small businessman has been more difficult. Dark-haired and bearded, the 38-year-old would-be entrepreneur is at the mercy of a sensitive government debate over service-slashing and budget-trimming that could boost his fortunes or leave him struggling, depending on its outcome.

The switch to private process-serving, scheduled to take effect nationwide on Aug. 1, was derailed in late July by congressional action calling for more study. An 11th-hour teletype from marshal headquarters at Tysons Corner alerted districts nationwide to maintain the status quo, leaving a patchwork of arrangements for serving court papers depending on local court rules.

New congressional hearings are set for Sept. 9. Meanwhile, the marshals are caught in the middle, serving both the Justice Department, which favors the change, and the judges, many of whom do not. In eastern Virginia, 11 U.S. district judges approved an Aug. 1 changeover, only to rescind it quickly in light of the shift in Congress.

Left out in the chill, if not the cold, were Merrifield and his infant business. "I've got $1,800 a month in overhead," he said. He has leased office space in an Old Town Alexandria town house and is sharing a secretary with two lawyers. "It's cash flow, cash flow."

For his firm, Marshals Metro Service Inc., to take off, all sides must agree to halt a tradition of civil process serving by the U.S. marshals at fees the General Accounting Office says "have not been changed significantly in 180 years."

An April report by GAO criticized the current arrangement as "uneconomical and inefficient," noting that in fiscal 1980 it cost Uncle Sam between $2 million and $4.7 million to subsidize the operation. Merrifield said that lawyers, favoring marshals' fees as low as $2, have helped block the end of a time-honored government boondoggle. "Look at who makes up Congress: lawyers," he groused.

Merrifield's rates are towering by comparison. His basic fee is $20, with $15 tacked on for next-day service. "But we're good. We have the profit motive," he said. He claims to have satisfied customers already from among about 100 law firms.

Merrifield said that the policy change would help free an undermanned marshal staff. He said, for example, that about 1,850 traffic tickets went unheeded by George Washington Memorial Parkway motorists in the year that ended in March because marshals here were too busy to pursue scofflaws.

U.S. Marshal Roger Ray, Merrifield's former boss in Alexandria and a friend, disputed the figure, but conceded that unexecuted traffic warrants "in this highly transient area" average "in the hundreds" yearly. He said deputies in eastern Virginia were asked to serve nearly 20,000 civil papers, which have a higher priority than traffic warrants, in the last year and achieved satisfactory service on 95 percent.

Meanwhile, as he waits for government to work its will, Merrifield sits in his office a few blocks from Alexandria's federal court, surrounded by unhung photos of himself guarding the famous and infamous -- Sen. Ted Kennedy, Koreagate's Tongsun Park and various mobsters. The telephone seldom rings.

Said one Alexandria courthouse regular, "He's going to have to wait a little longer before he gets rich."