Getting served with a debt collection lawsuit is one of the more upsetting things that can happen to you. When a process server hands a summons and complaint to you (or to someone you live with who can accept service), it means a debt collector is dragging you into the legal system.
And while getting served with a debt collection lawsuit is not fun, it is not the end of the world. In fact, that summons and complaint—legal process—provides rights to both parties to the case. Which means as a defendant in a debt collection lawsuit, you now have access to tools to defend yourself.
Let’s take a look at the first few parts of a lawsuit to try to dispel the fear and misunderstanding.
This article is a list of defenses that do not work. If you would rather find out what you should do, click over to “Served By a Debt Collector? What To Do Next.”
Most debt collection lawsuits are handled by overworked and unsympathetic debt collection attorneys. With that in mind, focus on your best defenses to the lawsuit. Here are some of the weaker defenses, which you should avoid.
Do you think debt collectors should be required to verify they have the correct debtor and the correct amount of the debt before filing a lawsuit against an alleged debtor?
A loaded question, to be sure, but here were the results:
A. Yes. 95.8% (5644)
B. No. 1.8% (108)
C. Undecided/No opinion. 2.4% (142)
Not much room for spin, there.
Pocket service (also known as pocket filing) is lawyer slang for the procedural rule in Minnesota that a lawsuit commences on service of the summons and complaint. This is different from the rule in almost all other states and the federal courts, where a lawsuit begins with filing of the summons and complaint.
When coupled with Minnesota’s rules on pre-judgment garnishment, this can cause serious problems. A defendant who was never properly served, for example, can end up getting money taken from their bank account without any notice or any chance to respond to the lawsuit.
The moral: if you discover or are even suspicious you may be named in a lawsuit, look into it. And call a lawyer.
Minnesota Representative Joe Mullery and Senator Ron Latz recently introduced a bill that would prevent debt buyers from filing a lawsuit without the ability to prove they have the right to collect a debt.
Why the need for the rule? Debt buyers and collectors file tens of thousands of lawsuits against Minnesota consumers every year, and probably serve at least as many that never get filed. But debt buyers should lose most of their lawsuits, if challenged.
Once a debt is in default—meaning you stopped paying it—one option is to attempt to negotiate a settlement with the creditor. (You can try this before you go into default, but creditors are rarely willing to play ball until you prove your poverty—and before they rack up some more fees.)
You could just pay the full amount of the debt, but that probably means paying a bunch of fees that bear little relation to your debt. And hey, it never hurts to ask.
When you make the call to negotiate a settlement, consider the following.
In almost every other state, a debt collector must file a lawsuit either immediately or within a short time after serving the summons and complaint. This means the court has an eye on the lawsuit, and the debt collectors must pay the “entry fee” if they want to use the considerable power of the court system to collect on a judgment.
Not so in Minnesota. In Minnesota, debt collectors get to use the power of the court system without telling the court. This includes the power to take money away from a consumer by garnishing their wages or bank accounts. It is kind of like taking the gavel for a joyride.
Following up on this post (In the event of a lawsuit, please head for the nearest lawyer), I thought I would talk a little bit about what to do after you are sued and after you answer the debt collection complaint. (If none of that made sense to you, go ahead and find yourself a consumer attorney.
More on combating debt collection lawsuits after the jump.
I have received two calls in the last two weeks from people who were improperly served in connection with a debt collection. The first is a college student who has never lived with his mother. The law firm’s process server, however, turned up at his mother’s house with a summons and complaint. She refused to accept service, telling the process server that her son has never lived at that address. The process server told her to take it anyway, that he just needed a signature. And so the lawsuit begins.
In the second case, the summons and complaint just showed up on the porch of the debtor’s father’s house. It was dated some twenty days before it was found, and none of the family ever saw a process server. Plus, the debtor has not lived with her father in nearly a year.
Service was improper in both cases, of course, but under Minnesota’s ridiculous laws, the first debtor’s bank account has been garnished even though he was never properly served and the debt collecting law firm never filed the lawsuit. I’m sure the same fate is in store for the second debtor unless we can move quickly enough to get the case thrown out.
I hope these are isolated incidents, but I am concerned they demonstrate the willingness of debt collectors to shirk the rules in order to increase their financial gain.