Posts Tagged ‘default judgment’

Ignoring a Debt Collection Lawsuit That Was Not Personally Delivered

Tuesday, September 10th, 2013

Question: Is it possible a debt collection company can sue the debtor on an unpaid credit card if they have moved to a new address? I have not received the lawsuit papers personally, but I learned from the California Superior court’s online case summary that a debt collection lawsuit has been filed and it states they served me. Can’t I ignore this?

My response:

Yes, the debt collection company can sue for an unpaid debt, even after the debtor moved to a new address, but the lawsuit must be filed in the proper court. In particular, the lawsuit can be filed where the defendant lives when the lawsuit was filed or where the defendant lived when they first entered into the agreement for the credit card.

After that, the debt collection lawsuit must be served in one of the ways permitted by the California Code of Civil Procedure. I explain in other blog postings the two main ways that a defendant can be served in Superior Court on a lawsuit: personal service and substitute service. Substitute service requires a reasonable number of attempts (typically, at least three) at the defendant’s residence or place of business. In your situation, did they try to serve you at your new address or where you work or do business a reasonable number of times? Do they know your new address or did you give that to them at any time?

As the videos on my home page explain, ignoring a debt collection lawsuit is one option of several. I’d recommend exploring carefully each of your options and then call a debt collection DEFENSE attorney (which is what I do) to narrow what options are most appropriate for you and your situation. Putting off dealing with a lawsuit is not suitable for most people, in my opinion.

The way I would compare a defendant’s putting off dealing with a debt collection lawsuit and letting it become a default judgment is that it is similar to not going to the doctor for treatment and anti-biotics of an infected wound. How long before the untreated, festering wound gets worse? How long before the infection spreads and can harm other body parts or even cause the patient to become seriously sick all over?

An unpaid default judgment can be difficult to set aside and is subject to the review by a judge, if after the proper motion is filed. A judge might conclude that the defendant was aware of the judgment and failed to promptly file a response when aware of the lawsuit or promptly file to set aside a default judgment. Thus, an older default judgment becomes almost impossible to set aside and it not only grows with interest at 10 percent per year, but other costs can be added, possibly attorney’s fees. A judgment also impacts, for most people, their personal credit scores for many, many years, making it hard to qualify for credit, property, and sometimes insurance and a job.
Robert Stempler
Twitter @RStempler

Asset Acceptance Did Not Serve Its Debt Collection Lawsuit, Monitoring Online

Friday, October 12th, 2012

Question: Per your fabulous on-line instructions – I looked on-line to find out about a lawsuit against me.  I noticed that Asset Acceptance, LLC filed a collection lawsuit against me to collect a older debt.  Unfortunately, they have not served me. What do you suggest I do? This is in California Superior Court and there is a hearing set in a couple of months. I was thinking of going to the hearing to see what they say.

My response:
First, it is not “unfortunate” that you were not served.  It is actually good news, as your time to respond to a lawsuit does not begin, until you (the defendant) have been served.  See link to my blog on deadlines to respond to a collection lawsuit. Thus, there is due date for you, until you have been served.

Second, I would not do anything. Fly below the radar and wait to see if you are ever served. It that occurs, marke that date on your calendar, so that you know exactly when your response will be due in court.  Until then, let’s just see what progresses and I certainly would not advise you to just show up in court, when you have not filed a formal response in the case.

Third, to be safe, every couple of weeks, I would visit the Court’s web site for this collection case for any activity, such as the filing of a proof of service. If that occurs, then you need to take action, even if no one has really come to serve you, because that is a formal representation to the court (though false) stating that the process server had served the summons and complaint.  Stay on top of this, because many times the process server states under oath that the defendant was served, when that never took place.  A default judgment may be entered after that, unless you take proper action.

Congratulations.  I checked online with the Superior Court’s web site. A recent entry shows that Asset Acceptance has dismissed its case against you without prejudice. They never served you, but for whatever reason, they dismissed their collection case.  It is unlikely that they will refile the case, now that they have decided to dismiss.  Thus, in my opinion you have dodged a bullet.

Once again, this proves that staying below radar, such as with my “Don’t Pay a Dime Strategy,” sometimes works and can save thousands of dollars and avoid bankruptcy. Had you been served, you would have contacted me, no doubt. I really appreciate your kind words.

Robert Stempler

Twitter @RStempler

How long to file papers in court, after receiving the summons and complaint via U.S. Mail?

Thursday, September 13th, 2012

Question: No process server ever approached me, but gave the summons and debt collection complaint to my wife.  A few days later, another copy arrived in the mail. I still have the envelope with the postmark. Do I still need to respond within 30 days and from when?

My response:
Under the California Code of Civil Procedure, which governs in Superior Court cases, the defendant must file their response in court not later than 30 calendar days from the date of personal service, which occurs when the server hands the summons and collection complaint personally to the defendant.

Substitute Service occurs after satisfying due diligence in trying several times to perform personal service on the defendant.  After due diligence, the process server hands the summons and collection complaint to an adult member of the defendant’s household or the person who appears to be in charge at the defendant’s place of business, then mails another copy of the summons and collection complaint to the defendant at that same address.

In this case, the process server has performed Substitute Service on you, which adds 10 calendar days, making a total of 40 days from the date of mailing for the defendant to file his or her response in court.

Some defendants receive only a copy of the summons and collection complaint by U.S. Mail and no one at their home or place of business advised them that they were served.  In those cases, you should still go on the premise that you have only 40 calendar days from the mailing date in which to file a response in court, to prevent a default judgment from being entered. Please see other blog postings about default judgments.

Robert Stempler
Twitter @RStempler

Never Served, but Now Something Came by Mail, a Request for Entry of Default Judgment

Saturday, August 18th, 2012

What does it mean when the collection lawyers sent me a Request for Entry of Default Judgment? The only thing that I received from this law firm before now were a couple of letters, which I did not call back, because I didn’t have money to settle.  The papers show they have filed a lawsuit in the courthouse near me, which the online case summary shows they claim they served the summons and complaint by mail on me a couple of months ago. I thought that the law requires personal service of lawsuits, something called “due process”?

My response:
You are correct, there is a Constitutional principle known as Due Process, which requires that a defendant be given notice of a pending lawsuit, preferably by personal service on the defendant. However, California civil procedure permits alternative forms of service, if the process server declares that they tried several times to serve you personally at home or at work, but you were never present.  This is known as due diligence.  After due diligence, they can hand the summons and complaint to someone who is an adult at the defendant’s house or apparently in charge at your workplace and then mail a copy to you at that address.  This is known a substitute service.

If you have been substitute served, rather than the usual 30 days to respond in writing to the lawsuit, California civil procedure adds 10 days from the date of mailing, giving you or your defense attorney a total of 40 days from date of mailing to file in court your response.  One point about substitute service: it must be delivered to someone at your residence or work address, or it is invalid and can be challenged, but act promptly and consult with experienced counsel on that, as there is no standard DIY form to set aside a default judgment.

Now that a couple of months have passed since the process server said he or she substitute served you, the debt collection lawyers have sent you a copy of the Request for Entry of Default, which they have also probably sent to the Clerk of the Court to be filed.  If the Clerk files it, then it becomes an enforceable judgment against you, unless you set aside the default judgment, satisfy the default judgment by paying money to settle in full with the plaintiff, or file bankruptcy to have it discharged.

A California judgment must be renewed every 10 years, or it expires, but many collection agencies keep track of judgment expiration dates and renew it until satisfied in full or discharged in bankruptcy.  Thus, I would suggest you deal with it now, if possible, as it can remain out there forever and pop up and be very annoying and vexing at the most inconvenient times.

Robert Stempler
Twitter @RStempler

Struggling with Wage Garnishment for A Default Judgment on a Credit Card Debt

Sunday, April 15th, 2012

For two years, my husband’s wages have been garnished at $100 per paycheck, which is what a judge ordered. His paycheck is  twice a month and his take home pay is under $2,000.  We don’t know what we can do, but now we got notice from our bank that they are also levying out bank account. If our bank account is taken after his check is deposited, we cannot pay our rent on the first, and we have two children. With interest, the judgment is just under $10,000 at this time.

My response:
This is a horrible situation for you that you have been held under this suffocating wage garnishment for two years, when you clearly cannot afford it.  I don’t know why a judge would have you pay that much, given your family needs and that you are already living on the edge, financially.

Looking back, perhaps this credit card default judgment could have been set aside, if you were not served. However, now that more than two years have elapsed, it is very doubtful that a judge will set it aside, because the courts expect a defendant to promptly file the papers to set aside an invalid default judgment reasonably soon after learning about it. You and your husband have known about this for two years, so I don’t see trying to set it aside a a productive pursuit for you, at this late date.

Looking forward, I think you need to immediately file a claim of exemption with the financial statement Judicial Council Forms. Hopefully, you are able to show the judge that this money has already been garnished and you have nothing else available and you need it for your necessities (rent, food, utilities, medical) and children’s expenses.

Looking further down the road, you should file bankruptcy to discharge this and any other debt. At $200 per month, you are barely paying $100 per month in principal, after the Sheriff’s fee for the wage garnishment.  Thus, you will not have this paid off for another 8 years. It makes no sense to suffer for eight more years and to have the debt collection law firm cause you to appear in court to fight off a bank levy, which also costs you bank charges.  After the bankruptcy, you can put that extra $200 per month to use helping your family, perhaps starting to save for emergencies, education, and other future events.

Robert Stempler
Twitter @RStempler

Default Money Judgment Entered Over Two Years Ago

Sunday, March 18th, 2012

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
Twitter @RStempler

Contempt Against a Debtor Who Has Not Paid?

Monday, November 7th, 2011

Can the court hold me in contempt or put me in jail if I have not paid a money judgment on a credit card lawsuit?

My response:

There are a handful of stories circulating in the media and on the internet about debt collectors getting orders to hold a non-paying judgment debtor in contempt.  A California Superior court would only issue a contempt order, if the judgment debtor fails to obey an order of the court, after being properly notified of such order. For instance, after being served with an order to appear to appear for an examination of their finances, the court may request the sheriff to bring the person who failed to appear into court for contempt of the order to appear.

Some people confuse court documents and jargon, which results in missing important deadlines and mandatory court appearances.  My firm’s web site has PDFs of sample documents, so people can see what are typical documents used in Superior Court cases to collect a credit card debt, by some of the debt collection law firms in California.  Here’s the link to these documents directly: Sample Court Documents

There are a few other instances in which consumer run afoul of court rules that can add to the total amount due on a debt collection judgment, which is the reason the web site’s video on the “Six Options” tries to discourage people from trying to represent themselves, as there are ways to make matters worse in a case.

Robert Stempler, Attorney at Law

A Judgment in a Debt Collection Lawsuit is Not Inevitable

Sunday, July 3rd, 2011

I found out I had a judgement for wage garnishment, but I was never served any papers. Another lawyer on suggested that if I file a motion to set aside the invalid default judgement, it only postpones the inevitable of the creditor getting a valid judgement against me. Should I file bankruptcy to get rid of my one credit card debt?

You get what you paid for, when an attorney offers an opinion on a web site about the “inevitable” outcome of a debt collection case, without knowing the specific facts and potential defenses. In my experience helping consumers defend these cases in the courts, there are many debt collection lawsuits that get dismissed and many more that get settled if there is no default judgment against the debtor. There is typically a higher price required to payoff a default judgment and compared with settling a debt collection lawsuit with no default judgment. Also, a default judgement shows up on your credit reports, until it is paid off (satisfied in full) or discharged.

The only thing inevitable in your case is that if you do nothing about this default judgment, it will remain in place and be enforceable until it is paid, settled, or discharged in bankruptcy. The idea of filing bankruptcy for a single debt does not make sense to me, except if you have hired a debt collection DEFENSE attorney, and the situation was not resolved in a favorable way.  There is no guarantee in court on the outcome.  Please search my blog postings for more under: “default judgment” and “bankruptcy alternative.”

Robert Stempler

Complaining to BBB About Debt Collection Harassment

Saturday, June 18th, 2011

I don’t want to sue in court, but my family and I have been harassed by a debt collector and I don’t want to let them get away with it. Should I complain to the Better Business Bureau (BBB)?

No, I don’t see that as getting what you want, which is to not let them “get away with it.”  Debt collectors are looking to collect as much money as they can on the debts they are responsible to enforce.  They maximize recovery by filing lawsuits, reporting the accounts to the credit reporting agencies, and making calls.  They know that people pay more when they are afraid and not thinking clearly, than if the situation is calmly presented without any stress from imposing phone calls, fear of a lawsuit, or adverse credit reporting hanging over the debtor.

Logically, debt collectors have no concern over their ratings with people who are the subject of their collection calls.  There are several debt collectors who boast about such things, such as having web sites that emphasize how ruthless they are towards the debtors and how they can get money from them, almost no matter the circumstances.  The BBB rates people who are comparing services, but debtors have no choice as to who a company hires to perform collection and many collection companies collect their own debts, which they purchased from other companies.

Finally, the BBB’s ratings have become almost meaningless, in my opinion.  A report by ABC News in 2010 found that the BBB rating system had been rigged by highly-compensated BBB local managers to increase “membership” fees and membership numbers.  BBB dues-paying members received a superior score. Companies that failed to pay dues to the BBB fees were downgraded, often substantially.  ABC News’s investigation found business that members received top ratings simply for joining, while non-members (such as the well respected Ritz Carlton Hotel in Boston) received bottom ratings when they did not join.

In any event, at some point debt collection agencies who are not paid will likely file a debt collection lawsuit in court against the debtor, which will force the consumer to play defense against the debt.  If you are harassed by the collection agency, it may be smart to consider taking the first move, rather than sitting back and waiting. Also, the statute of limitations period could work against you by waiting, because you have one year to sue them for collection harassment, but they have several years (depending on the debt and when it went into default and was last paid) to file a debt collection lawsuit, so they have the luxury of time that you may not have. See my blog posting on default judgments, linked here: Default Blog Posting.

Also, sometimes these debt collectors file a lawsuit, but fail to deliver the papers to you, as required by Due Process. When that happens, the court may mistakenly enter a default judgment against you, because the process server falsely stated that they gave you the papers. Thus, if you don’t wait for a default judgment, perhaps you can prevent a debt collection lawsuit and default judgment by hiring counsel and taking on the debt collector for harassment.

Robert Stempler