Archive for March, 2012

Default Money Judgment Entered Over Two Years Ago

Sunday, March 18th, 2012

Question:
I just learned from reviewing my credit report that a default money judgment was entered against me in California Superior Court on an old credit card debt. I was never served. I checked online with the court for this case file. The judgment was granted over two years ago.  Is it too late for me to do anything to reverse this default judgment or is my only option to try to settle this judgment, with it remaining on my credit for several more years?

My response:
It becomes increasingly difficult to set aside a default judgment as months and years pass. The longer a default judgment remains on file without a proper motion to set aside being filed in the case, the more judges express reluctance to grant a motion to set aside, even when filed soon after the defendant learns of it.

Two years is one of the key milestones, because California Code of Civil Procedure, Section 473.5 provides a two-year window to set aside a default judgment that was not served on the defendant and the defendant did not have time to file a response in court before the default was entered.  In this case, the two years have expired, so this particular statute does not apply. Thus, it may not be used as grounds for a motion to set aside, after the two years have expired.

Though Section 473.5 is not available to you, it is still possible to set aside the default judgment, using the Common Law rules of Equity, which are preserved by the Constitution. This can be done either by a motion in the case or a new case being filed to challenge the default judgment. It is often preferable to file a motion, rather than file a new case, but if the motion fails, there are court cases that state the new case can be filed to set aside the default.

Many judges are aware of the separate complaint to set aside an old default judgment, and not as many are aware that a motion to set aside can be filed after two years, because there is no court of appeal case which states this cannot be done, using the Common Law rules of Equity. Thus, some judges mistakenly deny the motion, when they see it was filed more than two years after the default judgment date.

There are no easy forms to set aside a default judgment. Thus, trying to settle and have a satisfaction of judgment filed is always available. If you do not work in a job or industry that has special rules against having a money judgment against you, it may be simpler to try and settle without the extra paperwork and risk of trying to set aside the default judgment. The downside to this approach is that the plaintiff debt collection attorneys and their clients often will demand more to settle, if they have an outstanding judgment hanging over the defendant.

Once the case is settled and a satisfaction of judgment filed with the court, you can ask to have your credit report updated to show the satisfaction of judgment. Also, the account should now show a zero balance due, if you have settled the debt and make the payments required.
Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Credit Card Lawsuit: A Money Judgment Is Not Inevitable

Thursday, March 15th, 2012

Question:
I know that I owe this credit card debt. I don’t dispute it, though I don’t have money to pay it. Is there any point to fighting the credit card lawsuit? Shouldn’t I just declare bankruptcy, so that my wages will not be garnished for many years?

My response:
It may seem bleak, right now. You’ve just been sued by a professional debt collection attorney.  You are not sure what your options are or how to best proceed. My web site’s homepage has several short videos which you should watch, starting with #1 on understanding your six options.

Bankruptcy is one of the options, but please give each of the six options your careful consideration, both with respect to the lawsuit itself and your overall financial situation. I suggest that you submit a detailed account to an experienced attorney to help you get a handle on your rights and options, so that whatever you decide to do, you will understand and possibly be happy with the decision and outcome.

The one thing about bankruptcy is that it often can be done later. Other options need to be considered right away and a certain process and timetable followed, but bankruptcy often can be done later, if necessary. Sometimes, bankruptcy is appropriate, and sometimes it is better to try an alternative and if that fails, then review bankruptcy later. Sometimes, in fact, bankruptcy must be delayed, such as when there are income taxes to be discharged or other issues to be handled before the bankruptcy can be filed.

Simply because the credit card lawsuit is for a debt that you stopped paying a while back, does not make a judgment against you in court inevitable.  One of the options discussed in the video is settlement. You can settle and not have any judgment or risk, if both sides agree to a settlement that you can afford to comply with. I have a legal guide on Avvo on documenting settlement agreements.

Also, if you defend this lawsuit, it is entirely possible that the plaintiff will not ready to take the case to a judgment and may dismiss their claims. I have defended many cases in which this was the result. Maybe it is me or the way that I take care defending my clients.  Or, perhaps the debt was not that easy to present in court or there was something in the paperwork that may have been challenging.  Plaintiff collection agencies and creditors have the right to dismiss before trial, even on the day of trial.  Sometimes they dismiss at trial when they see an experienced debt collection defense attorney show up to defend the case, with papers for the judge to read.

Or, perhaps after the trial presentation. the court determined that the plaintiff’s evidence was inadequate or improperly presented. Perhaps the plaintiff fails to satisfy the rules of evidence for key evidence.  Perhaps the debt collection lawsuit was filed after the statute of limitations had expired or some other defense to the lawsuit was available, such as a prior settlement or illegible or lost documents.

There are so many reasons and possibilities that can occur in any debt collection lawsuit, which can take several months to more than a year to get from filing to trial.  With an experienced attorney defending his or her client against a debt collection lawsuit, a positive outcome is more likely, making bankruptcy or a money judgment not inevitable.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Disability Benefits Are Exempt from Levy and Garnishment Under CA Law

Saturday, March 10th, 2012

Question:
I owe about $2,700 in credit card debt, which is in collection. I am receiving 90% disability from the VA for a brain injury in 2009.  Can the collection agency sue me?  If they get a money judgment, will they garnish my disability pay? If so is there a limit on how much they can take?

My response:
Under California Code of Civil Procedure, Section 704.130, “benefits from a disability or heath insurance policy or program are exempt.”  The recipient need not even file a claim, so that there should be no paperwork to protect your benefits and money deposited in your bank or other financial institution.  There are limits on this protection, only regarding spousal or child support obligations.

Do not put other funds in the account with exempt funds, or those funds may be levied and the funds applied to satisfy a bank levy.  Contact your bank, credit union, or other institution in which such funds are electronically deposited, so you are sure that they are aware that these funds are exempt as disability benefits.  Verify that they understand the funds are exempt and should not be released if levied.  Otherwise, find another financial institution which will reject attempts to levy exempt disability benefits.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Exemptions for Retirement Pension and Social Security Benefits

Thursday, March 8th, 2012

Question:
A bank got a money judgment on me for an old credit card debt in a debt collection lawsuit. I receive retirement from my state job and Social Security benefits. Can they garnish either of these?

My response:

Except for child, family, or spousal support, public retirement benefits are exempt from garnishment, per Cal. Code of Civil Procedure, Section 704.110. Similarly, private retirement benefits are exempt from garnishment, per Cal. Code of Civil Procedure, Section 704.115.

Be sure you notify the bank, credit union, or other institution in which such funds are electronically deposited that these funds are exempt from levy.  Verify that they understand the funds are exempt and should not be released if levied.  Otherwise, find another financial institution which will reject attempts to levy exempt public retirement funds and Social Security Benefits, per Cal. Code of Civil Procedure, Section 704.080.

Do not put other funds in the account with exempt funds, or those funds may be levied and the funds applied to satisfy a bank levy.  If the account balance is below $1225 for a single account, then the bank should automatically consider them exempt, under Section 704.080, subdivision (b)(1), for direct deposits. There are other amounts that are automatically exempt, so please see that statute to see if your situation applies.  Otherwise, keep no more than the exempt amount in the account, if an outstanding money judgment is lurking against you.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Sued on a Credit Card Debt and Worried About Credit Score

Sunday, March 4th, 2012

Question: I have been served with a credit card lawsuit on an unpaid credit card that I could not afford to keep paying the minimum every month. I am especially worried that this will lower my credit score.

My response:

If you manage to successfully resolve this lawsuit without having a money judgment entered against you, then the filing of a lawsuit should not reduce your credit scores at all.  However, I have gotten many calls over the years from people who tried defending a debt collection lawsuit by themselves, using ideas from a law book, an inexperienced attorney, or comments read online.  Some people convince themselves that in few hours of research, they can learn the secrets to be able outmaneuver an experienced debt collection lawyer.  Some web sites tout that mailing a couple of well-worded documents to the attorney and voila!, the judge will order the case dismissed. Not so. Not even close.

Were it that easy, why would debt collection agencies and national banks bother with hiring a lawyer and paying hundreds of dollars to a court for filing the case , then pay a process server to personally deliver the lawsuit?  Indeed, why would anyone file bankruptcy, if they could easily win a debt collection lawsuit with inexpensive “legal” forms, available online?

One more word of caution: don’t delay in dealing with this case, as that is a sure way that a judgment will be entered, which will show up on your credit report and harm your scores. See my prior blog posting on the four most common ways that a judgment can be obtained.

The most effective way to prevent harm to your credit score is with knowledgeable debt collection defense and understanding what is feasible, to prevent a money judgment from being entered against you. As Shakespeare wrote long ago, “First thing’s first.”  Resolving the credit card lawsuit without a judgment is how to prevent further reductions in personal credit scores.
Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler