Expert: Bankruptcy Services - 1/5/2012

Question
QUESTION: My husband signed a summons sent for a lawsuit from a company that bought my credit card debt.  After reading the summons, I realized it was a suit from the law firm suing me (but in my maiden name).  Shouldn't the lawsuit be filed addressing me in my currently legal married name and is this something I can use to my defense.  They filed the suit within the statute of limitations and I only have 11 days before the pretrial.  Please help.

ANSWER: Hello Melanie:

Don't be too hard on your husband for signing for the summons.   Even if he had not signed, they would have left it with him anyway and then they would say that they served you by serving a member of your household (most states provide that you can obtain good service of a summons and complaint by serving an adult member of the same household).  I have been doing litigation for over thirty years now since I graduated from law school and I cannot remember a single time when a state law actually REQUIRED the person to sign.    The fact that the process server asked your husband to sign is just a good practice on their part, but it would not have made any difference.     (When you see these people on TV running away from the process server, they are only hurting themselves by not taking the papers so that they know what is going on so that they can prepare a legitimate defense.   It is not all that uncommon for a process server to just state in his return to the court that he served you with the papers when he really didn't.)

On the other issue that you raise, you can claim in your answering papers that they sued the wrong person, but that kind of a defense in this circumstance is really a waste of time.  It is NOT the wrong person -  they just sued you with your former name.   If this issue came before a judge, the judge wouldn't pay much attention to a technical defense like that.    (If I were the one representing the company that sued you, I would just file an amended complaint with your right name.)

More importantly, with a pretrial hearing coming up, if you don't do anything, you can count on them obtaining a default judgment against you.   It is like a softball game when one side does not show up and the other side wins by forfeit - but they call it a default judgment and it is just as damaging to you as a judgment would be after a trial.    You have to take action right now.   The objective here is to prevent them from obtaining a judgment against you.  IN almost all states, they can garnish your wages to collect it, and in every state they can freeze your bank accounts without any prior notice to you.   Also, if you own a house, even though this has nothing to do with your house, the judgment itself will be a judicial lien against your house (which means that when you sell your house, if the judgment is still outstanding they will get their money from any equity you otherwise would have received at closing.    The new buyer will insist on that.     Suffice to say, you do NOT  want to let this go to judgment.

Aside from doing nothing, you have three other options.    Trying to settle with them sounds reasonable (and they will no doubt be suggesting this repeatedly), but settling with them is almost always not a good idea.  You can try to negotiate a settlement with them, but at this point they have sued you and they are going to go ahead with the suit and then claim that they will vacate (do away with) the judgment AFTER you pay them.  Also, you probably don't have the funds to settle with them anyway, and even if you did, you will not find them to be very honest in their dealings with you.  For example, they will claim that they will take the judgment off of your credit report and they will mark it as a paid positive account, but they won't.   They will mark it as a paid collection account but that is almost as bad on your credit as having it as an open collection account.   

Another option you have is to fight them.     If I (or any other lawyer) were to help you with this, the best way this can be defended is for you to take the fight to them.   You would first need to file an answer to their complaint (or make a motion to dismiss their complaint, depending on if the collectors made any mistakes in their paperwork), and in that answer you would make various objections and/or responses to the statements that hey make on their complaint.   You would basically be telling the court that you want them to prove you owe the money, not you have to prove that you don’t.    (What you would be doing is like a criminal case where the accused comes into court and pleads “not guilty”.    When a defendant in a criminal case pleads not guilty, he is not really saying that he didn’t do it, he is just saying “prove it”.)    In the same paperwork, you can also assert various “affirmative defenses” including, but not limited to the limitations defense that you suggested in your question.    To put it another way, if I do this for you, I will prepare your papers and that you are going to grade their paper (i.e., the complaint), and you are going to give them an “F”.  Doing this (filing an answer to their complaint) will keep them from getting a default judgment against you.   

That would be the first step.  You can then send the attorneys for the other side written discovery, specifically interrogatories, requests for the production of documents, and requests for admission.   The collectors would have to answer these questions/interrogatories (under oath), and they would also have to produce all the documents that prove that you have an account, that they have the authority to sue you, and that you did not pay what you owe – and they would have to do all of this within 30 days.  The chances are that they will not have the documents to prove their case, and they will be evasive in their responses.    What you can do then is request the court to dismiss the case because they are being uncooperative.    If I did this for you, I would charge you $150.00.    (In addition to what is described above, I would also prepare a pre-trial statement for you that will summarize your case that you can use when you go to the pre-trial hearing.    It will have everything you need so that you won’t be nervous in the court when you see the judge.)   

What are your chances of winning or getting the case dismissed?   The real answer is “who knows?”   Without a crystal ball there is of course no way to know what is going to happen in the future, but you can count on one thing.   Any result you have by doing this will be better than if they got a default judgment against you.   Sometimes the other side doesn’t do anything at all if you file an answer to keep them from getting a default judgment, and then the court will ultimately dismiss the case after a year or so because the other side that filed the suit is doing nothing.   Sometimes they fight back, but that is probably the exception rather than the rule.   It just doesn’t pay for a collection agency to spend a whole lot of money on attorney fees to collect a debt that sometimes is not even worth what they are trying to collect.   Sometimes they dismiss the case on their own when they see you are putting up a fight.   There is just no way to predict the future.   

If you get an attorney in your area to do all of this, I suspect that they will charge you approximately 1,000 dollars.    Depending on the amount involved in the lawsuit, many attorneys would just not want to be bothered with a case like this and would just suggest that you settle with them.   Again, if I did this for you I would charge you $150.   If you were going to do this, I would need for you to fax me or email me (after you scan it) a copy of the summons and complaint.    I could then prepare your responsive answer and the pretrial statement that you can mail to the other side and file with the court.    After I see the summons and complaint, I would have your papers (initially the answer and the pretrial statement) for you within an hour or so.

When you go to the pre-trial, I suspect that the judge will just be wanting to see if there is any settlement pending and he may or may not set the case for trial – probably several months from now.     However, it is very unlikely that your case will get that far.  If you act now (like today if you wish or over the weekend) you could possibly have these papers ready to file on Tuesday when the court’s open.

There is another option that you could either do immediately (or keep in reserve as an option) if things, for whatever reason, don’t go too well and it looks like they are going to get a judgment against you.     This is not likely to happen, if you fight them, but there is one way for sure that you can stop this lawsuit dead in its tracks.     If you filed for bankruptcy protection, the lawsuit would be done.   All you would have to do is call the attorney on the other side and give him your bankruptcy case number and the lawsuit would be nullified.    When you file bankruptcy, the court where you were sued does not have any jurisdiction (legal power) to continue with that lawsuit – it would be over and anything the court did would be void as if it didn’t happen.    

You have not stated near enough facts to be able to say if bankruptcy would be a good idea or not in your particular situation.    Depending on what state you live in (all of the states have a different set of exemptions, and if you called me I could tell you for sure if you would have any problem after I knew what state you were in and looked up what your exemptions were), it is very unlikely that you would lose anything because everything you own is probably exempt.   In a typical bankruptcy, the typical debtor does not lose anything when he files for bankruptcy protection.    

Will bankruptcy ruin your credit?    Of course bankruptcy is a negative entry on your credit, but when compared to a judgment, or even a series of debts that are owed (whether you have been sued or not), a bankruptcy filing is not all that negative.   In fact, if you have all of your debts discharged in bankruptcy, that can be a positive in the sense that now the creditors know that you have more income in relation to your debts (because all of your debts are gone), and debt to income ratio is probably at least as important of a factor in a credit score as is one’s credit history.   The real truth about credit is that you can get credit if you have good income.    If you have little or not income, you could have a perfect credit score and wouldn’t be able to buy anything on credit anyway.   On the other hand, if all you have are discharged debts on your credit report and a bankruptcy, if you have sufficient income the creditors will find a way to look past your report to your wallet.   The creditors make a big deal about bankruptcy being such a negative thing on your credit, but what they say is not what they do.   They just don’t like the idea of bankruptcy too much because it ties their hands and renders them completely powerless.  

If you did want to do a bankruptcy, I would charge you 250 if it was a Chapter 7 (the most basic bankruptcy that most people use), and if you had to file a Chapter 13 bankruptcy rather than a 7, I would charge you 350.     There is also a filing fee with the court, but in a Chapter 7, depending on your income and the number of dependents you have, you may be able to get that fee ($306) completely waived.   At the very least, in either a Chapter 7 or a Chapter 13, you can file usually without paying anything down and paying the fee in three or four installments over the next four months.   The only other fee that is involved is a fee for so-called debt counseling.   Since 2005 the courts have required people that file to obtain counseling before they file and obtain another counseling session after they file.    This is nothing to worry about though.    There is no real counseling happening though  -  you just go on line with one of the debt counselors that is certified for bankruptcy and answer a few questions.    It takes about 15 or 20 minutes and they charge less than 50 dollars.    I could suggest one that I think only charges 19 dollars the last I heard.


Again, I have no idea what your particular situation is, and this would be much easier to talk about on the telephone.    I will not charge you just to talk on the phone.    You are welcome to call me today, or tonight or anytime you want.    This is my number    915  261-3893

I hope you have a happy new year.    As for this pending lawsuit, cheer up.   Things are not as bad as they might seem.


---------- FOLLOW-UP ----------

QUESTION: I am interested in your services, but I would like to know who I am speaking with first.  If you could please email me your name and some creditials, I will get back in touch with you.  

Thank you,


Answer
Hello Melanie:    Although I am pretty much retired, here is a summary of my qualifications.  I just noticed that you had sent your follow up question.  You can call me now if you would like.  It is not that late here.


Experience in the area
Over 30 years experience assisting consumers with lawsuits and bankruptcy matters since graduating from law school.

Publications
Numerous published appellate court opinions; Law review publications; Article on consumer bankruptcy in Black Enterprise magazine; was requested to author a book on consumer bankruptcy by Doubleday Publishers

Education/Credentials
Over twenty years of education including law degree (J.D.); masters and bachelors degrees in political science; author of magazine articles related to consumer bankruptcy; hundreds of hours of continuing education legal education and seminars

Past/Present Clients
Have had well over a thousand bankruptcy clients during the past 30 years and have had many clients in civil lawsuits during the same time period

Jack Hall, B.A. J.D.
915  261-3893