Served By a Debt Collector? What To Do Next

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.

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Complaining Will Get You Nowhere

Nearly every news article on debt collection harassment advises readers to file a complaint with the Federal Trade Commission, the Better Business Bureau, and/or the state Attorney General. While this advice is not harmful, it is useless. None of these organizations are likely to do anything to help.

Instead, when dealing with a debt collector, take careful notes, record if you can, and call a consumer rights lawyer as soon as possible.

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Pocket Service (a/k/a Pocket Filing) and Pre-Judgment Garnishment

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.

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Minnesota Needs Debt Buyer Regulation

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.

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Do’s and don’ts of dealing with debt collectors

There are too many to list, but here are a couple of the most important ones:

Don’t tell a debt collector where you bank or where you work

Debt collectors are always in hot pursuit of bank and employer information because bank and wage garnishments are easy and inexpensive ways to collect a debt. A favorite trick debt collectors use to find out this information is to say “We already know you bank at ABC Bank.” Surprisingly, many people will reply “No I don’t. I bank at XYZ Bank.” Don’t fall for this trick.

Do keep accurate records of all communications with a debt collector

Be sure to keep all letters from debt collectors, including their envelopes. Take detailed notes of every conversation immediately after hanging up the phone. Sign and date these notes. If a debt collector makes a promise, demand that he confirm it in writing. Occasionally, debt collectors will make an agreement that they don’t have authority from the creditor to make. Subsequently, the creditor may try to renege on the deal. Combat this by having the agreement in writing.

Do understand the difference between the dismissal of a lawsuit WITH prejudice and a dismissal WITHOUT prejudice

Dismissing a lawsuit with prejudice means a debt collector can never sue you again for the debt. Conversely, a dismissal without prejudice means you can be sued again for the debt. Often, when a debt collector can’t prove its case, it offers you a dismissal WITHOUT prejudice and sells the debt to another debt collector to try again. Don’t fall for this trap.  Also, if you agree to settle a debt collection lawsuit, make sure you get a dismissal with prejudice and keep it. Occasionally, debts that have been settled get sold and collection activity resumes.

Don’t lose your temper with a debt collector

This is not always easy, particularly with debt collectors that use abusive language. And if you’re being called by debt collectors, you’re probably dealing with significant stress and it can be easy to lose your temper. Resist this temptation and keep your end of the conversation professional. Let the debt collector lose his temper and make mistakes. If the debt collector violates the FDCPA, your claim will be stronger if the debt collector’s abusive language was unprovoked.

(photo: Kevin Steele)

Minnesota is a friendly state—especially if you are a debt collector

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.

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So You’ve Been Sued, and You Answered. What Next?

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.

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