Collection Agencies Are No Mental Giants
Collection agencies are notoriously careless in filling out their legal paperwork. This is because collection agencies sue in large volume and expect to win by default, which is unfortunately what usually happens. The debtor is usually in despair ignores the lawsuit and folds. This is why it’s so important to manage your stress and not get driven from fear. Nothing good ever comes from fear. Nothing.
Collection Agency Discovery – They Use Boilerplate Forms
Assuming you don’t fold and you have managed to file and serve your Answer, the discovery process commences. This is the process where you get to discover what evidence they actually have, or not, to prove their case.
Sometimes collection agencies will want to intimidate you by serving you with high volume of Interrogatories (written questions) and Request for Production of Documents. For the collection agency, these are standard boilerplate forms that are easy to produce in volume. Don’t get intimidated. The best approach is to give them as little as possible and object to everything else.
Some objections include: The interrogatory is vague, ambiguous, protected by work-product and/or attorney client privilege; is intended solely to annoy and harass the respondent.
By objecting to Plaintiffs discovery, you will force them to file a motion to compel answers, which is unlikely for them to do since it will cost them even more money to prosecute their case. Remember, for them, it’s all about the money.
Miffed and frustrated, the collection agency will likely want to negotiate a settlement with you rather then spend more money litigating. They will offer to take a discounted amount and propose you pay the balance over time. Don’t do it! Settle now for what you believe is fair or continue litigating.
Don’t fall for the payment plan scheme. This might be a good time to have a lawyer negotiate the settlement for you. If they are suing for $5,0000 offer them at most $500 to settle the entire case right now. Have them sign a full release in exchange for a stated sum and always obtain an executed request for dismissal with prejudice of the entire action. Or force them to spend money by continuing to litigate the case.
Debt Mills Rarely Sue On Small Debts
A collector is much less likely to file a collection suit when the amount of the debt is small. Most will not file a lawsuit if the claim is under $ 1,500. Even this amount is too low to warrant the expense of litigating.
Disputed Controversies – Collectors are unlikely to sue if you dispute the claim or threaten to counter-sue.
A collector is unlikely to file suit if the collection agency is a debt-mill and has no history of filing lawsuits. You can check a collection agency’s litigation history by doing a public records search.
Retaining A Lawyer
If you can afford it, obtain the advise of an experienced debt and bankruptcy attorney. We advise you to speak to at least two lawyers before making your decision which to choose. Expensive lawyers do not necessarily mean great results. Sometimes the cheapest lawyer can be the best lawyer. Get referrals and shop around.
Prepaid Legal Plans
Consider purchasing a prepaid legal plan if you are cash poor – it may be very useful in determining the legal direction you should take when faced with collection lawsuits.
Public Low Cost Legal Clinics
There are also pro-bono and low-cost consumer legal services that are available through your state or county depending on your income level. Law school legal clinics are also a good source of obtaining legal advise – but you need to know most of the counselors are law students not licensed lawyers.
Small Claims Court – Collection Agency’s Forum Of Choice
Collection agencies often use Small Claims Courts. These courts are usually staffed by judges who are actually attorneys serving as a temporary judge. These courts adjudicate matters that are small amounts and therefore are known as courts of limited jurisdiction. Many small claims courts are limited to claims that do not exceed $ 5,000.
Other states have different limits. Some Small Claims courts require written responses and provide prepared answer forms, which only require a check the box response, and a signature and then it is to be returned to the court clerk. The court will require originals. Make sure you keep a copy for your own records.
Collection agencies prefer using Small Claims because the court procedure is usually simple and less formal. In many states, such as California, lawyers are prohibited from appearing on behalf of a litigant. This is where collection agencies have a huge advantage. The collection agency representative is not a lawyer but will be very experienced and knowledgeable on collection law.
This is exactly why the defendant-debtor should be prepared to argue their case and present evidence on their own behalf. Know your facts, defenses and even be prepared to submit a counter-claim. Chances are the collection agency will fold and want to settle with you as soon as possible.
However, quite often the collector has little or no evidence to present to the court, and is present in anticipation that you will not appear, allowing the collector to win by default. If you reach an informal agreement with the collector, prior to the hearing, it is still important to file an appearance with the court.
In states like California, the defendant loser in a small claims dispute has the right to appeal to the Superior Court and request a rehearing. The plaintiff loser does not have this right.
Losing A Lawsuit To The Creditor
Unless the creditor plaintiff is trying to collect a large sum of money and believes you have access to money or will in the near future, the case may actually get tried and if you lose and the defense obtains a judgment against you, there are multiple ways the collector can force you to pay.
If you choose to file for bankruptcy you should do it before a judgment is entered against you. Otherwise, while the collection of their judgment against you will be stayed by the bankruptcy filing, the judgment creditor will become a secured creditor and depending on the type of bankruptcy you file and your specific financial situation, the judgment holder may have a priority claim when it comes to remaining assets, if any.