Expert: Regan Shinski - 10/28/2009

Question
I have an old credit card debt from around 1998-1999 of $8,000. Didn't hear much of anything until a collection agency started sending threatening letters around 2006-2007. Then I received a summons in the mail to go to court. I was 600 miles from home working in another state and missed the court date. Not long after the court date, I received a judgement letter from the court that a $9700 judgement had been awarded to the collection service. Instead of hiring a lawyer (big mistake) I called the collection service and the representative wanted $130 per month, I told them I could pay $50. So I let them take $50 per month out of my checking account(second mistake)for 6 months on the agreement that they would contact me at the end of the 6 months and see if I was able to pay more per month. Also said they would settle for $5800. Not long after the 6 months was up, I received a copy of a garnishment order to my bank. On the court letter where it says garnishment and execution, the word garnishment was circled. Almost immediately after that, my checking account was garnished for $1100 on the date of feb. 26, 2008. The court order said that the garnishment was for a 6 month period.  I have since only kept enough in the account to pay for my $180 health insurance every month. Nothing else has happened since that date and I haven't heard a word from them in 18 months. I am self-employed so I assume that is why they garnished my bank account. Is there anything else that they could do and what should I do to protect myself and my family? If the debt was originally out of the statute of limitations could I have an attorney take them to federal court? I am very confused and would appreciate any advice you could give me.

Answer
Hi Anthony:

I'm sorry that you made the mistakes you did.  If it means anything, you are not alone in not understanding your options with collection agencies.  Don't beat yourself up too bad over it.

I don't think you have a case against them for just filing the case against you outside of the statute of limitations (SOL#.  The SOL only says you have an affirmative defense if you can prove it's outside the SOL.  If you would have went to court, showed it outside the SOL, the case would have been dismissed immediately.  My point is, it's not a violation of the law for them just to sue you outside the SOL.

The good news is you still have some options.  The issue of a default judgement gives you some options but it may be too late depending on the state and court/jurisdiction's rules.  You should go to the court - or look at their website - and file a motion to have the judgement VACATED.  If you were not properly served give the reason as improper service.  If that doesn't work, on the second attempt say you were 600 miles away and could not make.  If that doesn't work, use the SOL defense.  All three are possible options for you depending on the timing and court rules.  You should not need an attorney for this, but it could help.  The idea is not only to use your legitimate legal rights to get the judgement vacated, but to make it cumbersome for the plaintiff.  If they don't show up - it's vacated.  A vacated judgement basically means it's completely wiped off the record.  You could end up filing three separate motions on three separate occasions.  They would have to defend it each time.

Another option is one I don't recommend.  You could file bankruptcy.  If you qualify for chapter 7, the judgement could be dismissed.  Unless you are really cash strapped and have significant other debts, I would not recommend this because the cost and negative ramifications of a bankruptcy outweigh this single judgement.  It is an option for poor income an/or debt strapped people.

A third option is more labor intensive but may needed.  You could sue the collection agency under the Fair Debt Collection Practices Act #FDCPA).  At this point, I don't even know if you have a case yet, but you can build one.  

Readers Digest version:  You get/prove the collection agency is violating the FDCPA through credit reports, collection techniques, or other ways.  These violations then become the basis for a lawsuit - or threat of a lawsuit - that offsets and/or eliminates your judgement.  

This is too complicated to go into in this e-mail but you start by getting your credit report, disputing and asking for validation and see how they respond.  Credit repair companies like ours do this for customers for nominal fees - usually under $100.  It is a longer term, back-up plan in your case but you should start building that option now so they have less time to take more money from you.

However, your immediate and best options are to try and get the judgement vacated as mentioned above.

Good luck.  Please let me know if we can help of if you would like to talk about our credit repair options.

Regan
mbscompany@aim.com
813-454-1459
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