While our firm has suspended debt collection defense at this time, we see the need to educate consumers who have been served with debt collection lawsuits. For whatever reason, you have been served with a lawsuit filed by one of your creditors. The lawsuit could be seeking to collect on a credit card debt, a personal loan, or a deficiency claim from a repossessed automobile. You might have defaulted on the debt years previously, due to divorce, job loss or health issues. Your creditor has now filed a claim against you in magistrate court requesting a judgment against you so that they may collect on the debt.
Whether you believe that you have a legitimate challenge to the debt, or you acknowledge the debt but cannot pay all the money at one time, these are the common mistakes to avoid when deciding how to respond.
When a lawsuit is filed against you in magistrate court, you have 30 days to file a response after the lawsuit has been served. “Service” of the lawsuit in most instances means that it is personally delivered to you, either at your home address or place of work. However, the lawsuit may also be served upon any adult that is present at your residence. Many debt collection defendants make the mistake of assuming that if they are not served personally, the time to file a response never starts to run. This is not correct. A return of service will be filed with the magistrate court, identifying the person to whom the lawsuit was hand – delivered, as well as the time and date of delivery.
Another mistake made by debt collection defendants is that they assume that a court date will automatically follow the filing of the lawsuit. A trial date will not be set unless the defendant files a response to the lawsuit! A response to the lawsuit is called an “answer” and must be filed with the magistrate court in which the lawsuit was filed. A copy of the answer must be served on the plaintiff, or the plaintiff’s attorney if applicable.
Many debt collection defendants believe that calling the creditor or creditor’s attorney constitutes a response to the lawsuit. Assuming that the proper notices under the Fair Debt Collection Practices Act are given, neither the plaintiff nor the plaintiff’s attorneys are required to notify the defendant of the correct way to file an answer. Many defendants learn the hard way that their phone call did not constitute an answer after they receive a default judgment from the magistrate court.
There are also additional pitfalls for a debt collection defendant who communicates with the attorneys for the creditor. Many times, the law firm will use those communications as an attempt to identify assets from which the judgment may be collected. Specifically, they may identify bank accounts that can later be garnished, or employment information that can be used to obtain a wage garnishment. Communicating directly with a debt collection law firm comes with many perils.
Even if an answer is filed with the magistrate court and properly served upon the debt collection plaintiff, many defendants failed to file a verified answer if the lawsuit is filed on a credit card debt. A verified answer is an answer that is signed under oath, disputing the allegations in the lawsuit. A wily creditor attorney may wait until the response deadline has expired and then seek to have the defendant’s answer stricken because it was not sworn and filed under oath. This will then lead to the magistrate court entering a judgment against the defendant and in favor of the plaintiff.
In summary, to avoid a default judgment, you must timely file a response within 30 days of service of the lawsuit. The response must be filed in the magistrate court and a copy of the response must be mailed to the plaintiff or plaintiff’s attorneys. If the lawsuit is on an open account, the answer must be verified and signed in the presence of a notary. The answer also must respond directly to the allegations in the lawsuit. Assuming all of these requirements are met, then the magistrate court will issue a notice of the trial date.
If you acknowledge that you owe the debt, the end result is going to be the same. You will either be subject to a default judgment for the debt, or a judgment after trial. Under such circumstances, you should find out your options under bankruptcy. The sooner you find out your rights under the Bankruptcy Code, the better, as you may save yourself a lot of time and protect your assets from post – judgment recovery for the debt. At Leiden and Leiden, P.C., we offer a free bankruptcy consultation. If you have been sued by one of your creditors, please make an appointment to meet with one of our attorneys and to discuss how bankruptcy can protect you.