Posts Tagged ‘motion to set aside default’

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

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

Credit Reporting of Non Existent Small Claims Court Money Judgment

Tuesday, May 15th, 2012

My credit report shows a money judgment from small claims court, but that debt collection case was dismissed when we settled before the case was called.  I have a document showing dismissed and I am applying for a job that may want to check my credit records.

My response:
You probably had a local company sue you in small claims court to collect its own debt, because debt collectors typically are not permitted to enforce in small claims court debts that were assigned to them.  (Cal. Code of Civil Procedure, Section 116.420, subd. (a).)

Please check the small claims court’s record of that case to verify it was dismissed.  Then send a copy of the case record (showing no money judgment, dismissed) with a cover letter to dispute this on your credit report. My Firm’s web site’s ( sample letter 3.1 would be a good form to follow and already has the addresses for the big three credit reporting agencies. If you only need to dispute with one of them, then remove the other addresses and send it to the one that is reporting this money judgment. Please also be sure that you follow the letter writing tips, such as keep a copy for your records and send by U.S. Certified Mail, return receipt requested. Once disputed, the agencies by law must investigate or remove within 30 days of receipt.

If you find that the court mistakenly entered a money judgment in the collection case in small claims court, then before you can dispute this on your credit reports, you must get the court’s record corrected and the judgment reversed (vacated, set aside).  You may need to file a motion with the court to set aside an invalid default judgment.  See Cal. Code of Civil Procedure, Section 116.740, for the procedures to vacate an improperly entered default judgment.  However, it sounds as though you were properly served and appeared at the hearing, so that you may need to file in Superior Court a separate complaint in equity and have a trial to vacate the improper default judgment, taken without your consent.  This is a complex proceeding and you would be well advised to consult and retain experienced legal counsel to ensure that the case and law are properly presented, or the court may not grant the relief that you need.

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

No Easy Form to Remove a Bad Default Judgment

Sunday, January 16th, 2011

I learned that a debt collector has a default judgment against me on a credit card lawsuit, but I was not served. I need to get it dismissed.  What form would I use for this?

My response:
There is no standardized form for setting aside a default judgment.  The default case file must be evaluated.  A plan proposed. Then the appropriate papers prepared by someone who has taken the time to become familiar with the case file, the evidence available that proves lack of service, and the law that permits the court to set aside a default judgment.  Legal briefing is required and the court often requires counsel to appear for oral argument.

I have filed many such motions and other proceedings to help clients set aside a default judgment that was entered without valid service on the consumer defendant.  The papers require careful preparation and evaluation of all available evidence and the applicable law. I have also seen plenty of cases in which the consumer has tried to set aside a default judgment themselves or with limited help by an attorney, which results in the court refusing to set aside the default.

As with any court proceeding, each individual must decide whether to retain competent counsel or go it alone, acting as their own legal counsel (known as “pro per” in state court and “pro se” in federal court).  The two common mistakes by consumers for this decision are: (a) not asking an experienced collection defense attorney for a fee quote to be represented; and (b) not considering the downside price, if they fail trying to do it themselves.

In more than 14 years of working for consumers, I believe that in most cases, the cost of hiring competent defense counsel is much lower than the price of handling it without counsel.  There is no guarantee of success, but if you are not attorney, then the court will not receive the briefing that it expects, making the outcome more likely to be unfavorable, if the plaintiff’s professional debt collection lawyers mount an opposition.

One more advantage of hiring a lawyer to represent you: once the court restores the case to active status, what is your plan to win the case?  Unless you know what to do, after the court sets aside the default judgment, the debt collection agency could convince the court to enter judgment against you, if you are unfamiliar with California Civil Procedure and Rules of Evidence.

Robert Stempler