Expert: Jason Shear, Esq. - 7/21/2009

Question
I had an old credit card debt back in 1992 with a credit limit of $900 dollars. Well i did not pay it and it eventually went to collections and was charged off as bad debt. Well as time passed back in 2006 this credit card company named ameridept Inc. was found guilty in a class action lawsuit for overcharging consumers and had to repay an amount back to consumers. A collection company named midland credit company bought the loan and hired lawyers from love beal, in which they filed a summons for court. I did not realize i had to filed an answer stating i did not owe the amount of $1900 dollars, with the courts i only sent my answer to the collection agency and not the court, i was so ignorant to this type of lawsuit without a court date, So this company received an default judgement and was awarded way more money than what i had originally owed from the original debtors. I mean at that time i hadn't made a payment on this debt since 1999. Now they are trying to get a wage garnishment? what can do to get this judgement taken off?  Will this be a hard case seeing that they won a judgement by me not sending my answer to the courts. This debt is so old? What can i do.

Answer
Rosell:

You need to get this default judgment vacated.  You did not say what state you are in, but the actual standards to set aside a default judgment will be found in your states's statutes or rules of procedure.  Procedures may differ for different level courts within the same state.  

Certain trial judges have little sympathy for even unsophisticated pro se defendants who fail to properly answer and contest a collection action, and are loathe to set aside default judgments.  But state law is generally favorable to allowing a default judgment to be set aside.

A good starting point is the Federal Rules of Civil Procedure, because many states pattern their procedures after these rules.

Rule 55(c) of the Federal Rules of Civil Procedure states that a default judgment can be set aside pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, and most states have a parallel rule.  The federal version of Rule 60(b) states that a final judgment can be set aside for the following reasons:

1) Mistake, inadvertence, surprise, or excusable neglect;
2) Certain newly discoverable evidence;
3) Fraud, misrepresentation, or misconduct by an opposing party;
4) The judgment is void;
5) The judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
6) Any other reason that justifies relief.

Most states enumerate similar grounds, but there are variations, so that it is important to carefully parse your state's standards.

In addition, a number of state supreme courts have stated that default judgments are disfavored and the trial court is vested with broad discretion to set them aside.

Based on the facts you outlined in your question, you are going to want to argue excusable neglect.  For example, Courts have ruled that a pro se defendant's confusion as to court procedure or ignorance over the consequences of a default can be excusable neglect.

The judge may want a meritorious defense to the debt collection case as well.  From what you stated, the debt was past the Statute of Limitations and the amount they sued you for was inflated.  These two issues should satisfy the meritorious defense criteria.  

Hope this gets you on the right track.  If you have any other questions, please do not hesitate to ask.

Jason Shear, Esq.
Attorney at Law
Admitted in NY & NJ
(716) 566-8988




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