A detailed overview of being sued by a debt collector (debt buyer) in small claims or district court
A detailed overview of being sued by a debt collector (debt buyer) in small claims or district court
One of your five options when sued by a debt buyer (such as Asset, LVNV, Midland, Portfolio, etc) is to fight the case on your own.
Especially in small claims and district courts, this can be a great choice for you.
But what happens?
What happens from the moment you are sued until after the case is over?
If these questions interest you, then you’ll want to invest about 35 minutes watching the video or you can read the transcript below.
I think you will find this very helpful in helping you to discover the process — and discover the way to bring peace out of the chaos of being sued. There is a way out. There is a solution. One that is right for you — we wish you the best on discovering that so you can put this behind you.
I hope you find this useful and if we can help you, let us know — you can call us at 205-879-2447 and we’ll be glad to help you walk through your options including handling the case on your own.
Here’s the transcript…
Hello. My name is John Watts. I want to welcome you to our webinar. What we’re going to talk about today is if you’ve been sued in District Court or in Small Claims Court by a debt collector or debt buyer, what is the overall process or the big picture of that. Let’s go ahead and start with this.
I have here a copy of, it’s just a typical lawsuit. This is what’s known as a complaint which is the first thing that will happen in a collection lawsuit. A debt collector or a debt buyer and this particular example, it’s Unifund, but it could be Midland Funding, LVNV Funding, Portfolio Recovery, Asset Acceptance, they’re all sorts of these debt buyers out there. They prepare a complaint.
This is a document that gets filed in court and it says, first of all, who they are, so it’s Unifund, Midland, Portfolio, whoever it is. Then it’ll have your name on it. Up at the top, it says what court it’s being filed in. Is it being filed in Small Claims Court, District Court, is it Jefferson County, Madison County, Shelby County, which county is it?
Then it will say what you’re being sued for. It might be $1,000, $5,000, $10,000. Sometimes it’ll give you a little bit of information about what this debt supposedly is so as you didn’t go borrow money from Unifund or Midland Funding, Portfolio.
Typically, it’s a credit card. Sometimes in the lawsuit, it’ll say this is a GE Money Bank or this is a Chase credit card or Capital One, City, whoever it might be. At the end of this lawsuit, it’ll say, “All right. Based on everything we’re saying in here, we want a judgment against you,” for the amount that they’re suing you for.
That’s what starts the lawsuit.
The Advertisement Letters From Bankruptcy Attorneys And Ferry & Nicholas
Usually, the very next thing that happens from your perspective is you get a letter. You may get several letters but usually, there’s a letter from a place called Ferry and Nicholas or Nicholas and Ferry. I forget which one it is, but they are a “mediation firm.” They’re not lawyers and they usually will write to you the very next day. You get sued on a Monday, and on Tuesday a letter is going out to your house. You get this letter and it says you’ve been sued and it may list the name Midland, Portfolio, whoever. Then it’ll say, “If you want us to help you negotiate or mediate between you and this, debt collector, this debt buyer, then give us a call.”
Now I’ll come back to them in just a moment.
You may also immediately get letters from bankruptcy lawyers.
In my opinion, you should not get any letters from bankruptcy attorneys until after you’ve been served. Our ethical rules say you have to wait 7 days. Then 7 days after somebody’s been served, then you can send advertisement letter to them. Some lawyers don’t follow that and so you may get letters from lawyers. You open up the letter. It says, “Hey, I’m Joe Blow, attorney. You’ve been sued. I can help you file bankruptcy.”
My suggestion is, if a lawyer sending you letters is violating ethical rules doing that, maybe that’s not the lawyer that you want to consider, but that’s up to you.
Going back to Ferry and Nicholas, if you get a letter from a non-lawyer saying, “Hey, you’ve been sued and I’ll be happy to help you negotiate to mediate this,” I think the natural question is:
“Why would I want to deal with a legal situation and have a non-lawyer representing me?”
That doesn’t quite sound right. Again, use your own judgment on that. I’m just wanting to walk you through the process. The first thing is you get sued. Usually, then you get notified by the lawyers or this Ferry and Nicholas place.
You Will Next Be Served With The Complaint
Then the third step is you’ll actually get served. That’s where it could be sheriff’s deputy. It could be a private process server. There’s one called VanSlam that’s pretty prominent.
They knock on your door or they walk up to you in your driveway they say, “Hey! Here’s some legal papers for you and now you’ve been served.”
Being served is significant because that triggers the clock to start running on how long do you have to respond to this lawsuit.
This video is really about being in small claims or district court. You have 14 days to respond. I should have said this. We’re really talking about lawsuits in Alabama and so that’s what the time period is, 14 days from when you’ve been served. Sheriff’s deputy, VanSlam, some private process server or even certified mail. You can be served by certified mail. You have 14 days.
What If You Don’t Do Anything?
Unfortunately, this is what about 80, sometimes 90% of people, this is their response: nothing.
They do nothing.
If you do nothing when that 14 days runs out, then this company that sued you: Unifund, Portfolio, Midland, Asset Acceptance, LVNV, they are going to file a motion or an entry or a notice, all different ways to describe it. Here’s bottom line: they’ll get a default judgment against you even if you don’t owe the debt .
How Bad Is A Default Judgment?
If they get a default judgment, understand this is a real judgment, and now that opens you up to garnishment of your wages, 25%, garnishment up your bank account, the seizing and selling of your car, of your house, put a lien on your property, all sorts of things that can happen. You definitely want to avoid that default judgment.
You’ve been sued. You’ve been served. You’re looking at your time. You go, “Okay. I want to take some action. What do I do?”
Your Five (5) Options
We have a long video on this. I’m not going to go into much detail but you have five options: You can:
- File for bankruptcy, very rarely appropriate but it can be appropriate.
- You can fight this lawsuit on your own which means you don’t hire a lawyer.
- You can settle the lawsuit on your own so don’t hire a lawyer.
- You could hire a lawyer to fight the lawsuit or
- Hire a lawyer to settle the lawsuit.
Normally, if you’re hiring my firm, these last two were combined because we respond to the lawsuit and we go to the debt buyer, the debt collector, and say,
“Look. You’ve got a choice. You can drop the lawsuit. We’ll pay you no money. You get off of our credit report and we won’t sue you or we’ll go to trial.”
That’s the option we give them. We don’t really negotiate other than we say, “Do you want to fight this or do you want to settle this and get this off our credit report and go away?” Again, I go into that a whole lot more detail about your options in the video that you can watch.
Let’s say that you go, “You know what. I want to handle this on my own. What do I do?” The most critical step is to file an answer to this lawsuit.
File Your Answer
Respond to it. If you’ve been sued in small claims court, they’ll give you a little form and answers. It’s going to have four boxes: A, B, C, D. I think box A says, “You sued me on the wrong county.” Box B says, “I admit everything.” I think box C is, “I admit owe the debt but I don’t admit I owe the full amount that you claim.” Box D is what most folks will choose — “I deny owing anything.” Then it gives you a little space you can type something in or hand-write something in.
In district court, you normally are not given that form but you can find it online or you can hand-write or type an answer. There’s really no magic form.
Here’s the bottom line: You want your name and the name of the company suing you. You want the case number, and that’s gonna be in the upper right-hand corner. They’ll say something like SM for small claims or DV, that’s district civil. You want to write that number in and then you up put what you’re saying in your answer. Sign it and then you file that in the court.
What Do You Put In Your Answer?
I don’t represent you so I can’t tell you what to put in your answer. This is not legal advice. What I’m doing is giving you general educational advice, just showing you the big picture of what’s going on in these lawsuits.
I’ll tell you what a lot of people put down is they say, “Wait a minute. I’ve been sued by Unifund, by Midland, LVNV, Portfolio, Asset Acceptance. I never did business with those companies. I never borrowed money from them. They never fixed my air conditioner, fixed my car, fix my roof. I’ve never had dealings with them.”
So if you never had dealings with these people and you got sued by somebody that you’ve never done business with, I think the natural thing is say, “Wait a minute. I don’t owe this company any money.”
That’s box D.
If these guys can come into court and prove that they own the debt, I don’t care if you owe GE Money Bank, Capital One, Chase, City, whoever it may be, those guys didn’t sue you.
But if a debt buyer sues you, then they have to prove you owe the debt and if they don’t, they lose. Even if they prove this, they have to prove that they own the debt.
I don’t know of any way that you could know whether or not they own the debt when you get this lawsuit because it just says they own it. They could say you owe a billion dollars but just because they say it doesn’t make it true
Most people file and answer, they check that box D and say, “Hey, look. I don’t owe the plaintiff any money.”
Plaintiff is the company suing you, the debt collector suing you. What else do you put in there? You can put other, what are called defenses or affirmative defenses. That’s where you say, “Even if I do owe the money and even if Unifund, Portfolio, whoever owns the debt, they still lose.”
To give you the most common one: statute of limitations. We say statute of limitations in Alabama is 3 years. The debt collectors say it’s 6 years.
Which one is it? Ultimately, it’s for your judge to decide but I think that there’s very strong argument and the correct answer, the correct analysis is 3 years. Almost always, these guys are suing you beyond 3 years. A lot of people put that in their answers: “I don’t know the plaintiff any money and statute limitations has expired.”
What Do You Do With That Answer?
You take it to the clerk’s office. You go to the courthouse. Usually there’s security and you say, “Hey, look. I was sued in small claims or district court. I’ve got my answer. Where do I go?”
The security guys will be able to tell you, “Oh, well, that’s on the first floor. That’s on the fifth floor. Yeah, here’s where you go.” You walk in there and you say same thing: “I’ve been sued,” and say to them (assuming this is true). “I’ve never done this before. I want to file my answer. Am I at the right place?”
Take you a couple copies of your answer so you can give one to the clerk and then he or she will stamp that and with the date and time so that they know when it was submitted. They put that in the file then you want to give them a copy to mark as stamped in so you keep that so that you’ve got proof. “Yes, I did file my answer.” You want one another one of the copies and send it to the collection lawyer.
Make A Copy Of Your Filed Answer
My suggestion is when you get home or get back in your car, take your phone, take a picture of your answer. Make sure you can see where the stamp is showing the date and time. In that way, if somebody ever comes back later and says, “You never filed an answer.” We’ve had this before where the collection lawyers will say, “I want a default judgment because at 14 days has expired, remember you got served here? Your 14 days, now you’re time is gone. They can move for default judgment and they say you never filed an answer.
You can respond, “Wait a minute. I’ve got this right here. I’ve get the answer. See? It’s stamped up here.”
Why do I say take a picture with your phone? What if you lose this? You’ve got it on your phone, but don’t just leave it on your phone, email the picture to yourself. If you have a Gmail account, Yahoo account, some account that’s going to be up in the cloud, email it to yourself so that, again, if you drop your phone, you lose your phone, this paper gets destroyed, you’ve got the proof of it.
You file your answer. What happens next?
You Get Your Trial Date
Usually the very next thing is you get a trial date. That will come in the mail. Usually it’s not a full size letter. Usually it’s going to be about this size.
For most of us, it’s about the same way we get our voter, I forget that technical name but you have a little card you get, it says, “Here’s where you go vote,” and you tear it cross top and you open it up. That’s usually what the trial date comes. Some courts will send it in a letter and you open it up. It says,”Be at trial at 9am at such-and-such courtroom.” It may be very small also.
Here’s the bottom line: You file your answer. You tell everybody who lives with you, “Nobody throws the mail away without me looking at it.” You have to make sure this trial notice doesn’t get thrown away. It may be stuck in between the Papa John’s coupon and the Captain D’s coupons. If you go, “Oh, it’s just a bunch ads,” you throw it away, you may have thrown away your trial notice. The trial notice does not come by certified mail.
The court has no obligation to call you and no obligation to make sure you receive it so you need to be checking your mail every day.
Go through every piece of paper say, “Did I get anything from the court?”
I’ll just tell you this. In most counties, you’re going to be trying your case 4, 6, 8 weeks after you submit your answer. So if you don’t get the little trial notice within about a week, I’d start calling the clerk’s office and say, “Hey. This is John Watts. I got sued by Portfolio. Here’s my case number. I filed my answer about a week ago or 2 weeks or 3 weeks or whatever, and I haven’t gotten a trial date yet. I just wanna make sure hadn’t missed that.”
If you’re always nice to them, even if you’re not nice, they’re usually nice, but particularly if you treat them with respect, they’re going to be very nice to you. They’re going to look up your case and say, “Oh, we haven’t set it for trial,” or, “Yes, we have set it for trial. Here’s the trial date.”
Now, a little bit of advice. This is true also when you go in to file your answer and when you call the clerk’s office, be respectful of the them. Don’t walk in, Monday morning at 8:30 and be impatient for them. Don’t go Friday afternoon at 5:00. Try to go when it’s not going to be so crazy or if it is really crowded, just be very patient. If you’re calling them on the phone, again, I wouldn’t call right when it’s the busy time for them. Just check in every 3, 4, 5 days until you get that trial notice.
You get the trial notice. On July 15, you’re going to trial. What do you do after the case is set for trial?
Prepare Yourself For Trial
My suggestion is if you’re handling it on your own, let us know so we can send you some information about mistakes that people often make. I think we have seven of them and I won’t go into that here because you can look at that information we’ll send you. That may help you.
Here’s the other thing you do. Go to court before your trial. Your trial date is here, back up a week, 2 weeks, go to court. I don’t mean just any court. I mean, your judge. If you have Judge Amari in Jefferson County, if you have Judge Alsbrooks in Shelby County, if you have Judge Smith, wherever, go to their courtroom and watch when they’re doing small claims or District Court trials, not criminal trials but civil trials.
Here’s what you do: Pick up the phone. Call the judge’s office. If you don’t know who your judge is, you can call the clerk’s office and say, “Hey, who’s my judge?” They tell you who your judge is.
Call the judge’s office and say, “Look. This is John Watts. I got sued by Midland Funding. I have a trial date, July 15. I was wondering are you gonna have any other trials before that so I could just come watch and see what happens.”
Everybody that’s done this has gotten this response. The court is very friendly, very nice, actually pleased that you’re calling because these things are open to the public but really the public never comes in to watch what’s happening. The judges like for the public to see. If you’re going to represent yourself, they really like for you to come ahead of time so that know the process, you know what’s going on.
Why do you do this?
I want you to know:
- where the courthouse is.
- I want you know where the judge’s office is,
- what’s parking like,
- how do you get through security,
- where do you find your judge?
Here’s what happens. A lot of people, they’ll say, “Oh, I wanna handle this on my own. I don’t pay any money to a lawyer.” That’s fine. I tell them, “Here’s what you need to do. Go watch trials before your trial.” They go, “I’m too busy for that. I don’t need to do that. I know where the courthouse is.” Then they call me after their trial and they’ve lost.
“Well, I got confused where the courthouse is. I couldn’t find a parking spot. I had no idea, Monday morning, there’ll be a lot of people there. I forgot about security. I had to stand in line. And I’m like, ‘Oh my goodness. I’m gonna be late.’ I didn’t know you had to go through security. I finally got through security and I can’t remember which courtroom it’s at, so I sat in the wrong courtroom, figured it out, got to the right courtroom. They’re already finished and the judge didn’t seem happy that I showed up, like, 25 minutes late. And I panicked and I just agreed to a consent judgment.”
That happens repeatedly, over and over.
Here’s the solution: If you’re going to do this on your own and you’re not spending money, then spend time. Go the week before. Here’s your trial, go the week, 2 weeks before, find where you’re supposed to go. Find out about parking. Find out how security works.
What do you do when you get there?
You sit down. You look around. Have your notebook. Take a notebook with you. Make notes. What happens when the judge walks in? Normally, everybody stands up. What happens when the judge does what’s called the docket call?
That’s where the judge will be sitting there and the judge say, “All right. I’m calling these cases Midland versus Smith, LVNV versus Jones, Portfolio versus John Watts.”
You’ll see people stand up, lawyers stand up, people who were there representing themselves will stand up except, here’s what you’ll see: if there are 10 people representing themselves, about half of them will stand up. What did the other half do?
They don’t show up.
It gives you an idea, doesn’t it? You’ve got to show up.
Then you just watch and observe what happen. It’ll make you so much more comfortable.
Let me tell you this.
I’ve been trying cases for 20 years. When I say trying cases, I mean federal court, jury trials, state court jury trials, things that may last a day, 2 days, or even a week. I tell you that not to brag but just to say I’ve been doing this a long time and I’ve got a ton of trial experience.
If I’m going into a new courthouse, I want to get there beforehand. Even if I’m familiar with the courtroom. I want to go to that courtroom, sort of get a feel for where do I sit, where’s the jury. You don’t have to worry about the jury trial but where’s the jury sitting, just so you can soak it all in. As what I want to do is remove a lot of the nervousness.
I don’t want you to walk in and have no concern because if you walk into a trial, your trial, the morning of your trial, and you have no concern about it, you may be dead. 🙂
You need to check your heart because your heart ought to be pounding on this but it ought to be under control. That just means you’re interested, that you care about this, you want to do well. You walk in like, “I don’t care.” That’s not a good situation because if you don’t care you’re not even going to show up. You want to care but you don’t want to be just overwhelmed with nervousness or anxiety.
What Happens At Your Trial
A lot of times the collection lawyer will have some papers. You’ll see him and he’ll say, “Come out in the hallway with me.” The judge may say, “Go out in the hallway with this lawyer,” and the lawyer will say, “Look, I got all these papers. I got statements. That proves you owe this debt.”
All it proves Mr. Collection lawyer is that you have statements. That’s all it proves. Their idea is we got statements, so you owe the money.
“I don’t know if I owe the money or not. I don’t know who you are.”
“Oh, well, we’re Midland and since we have the statements, that proves that you owe us the debt.”
No, that proves that Midland sued me and Midland has copies of the statements. Obviously, I’m being silly when I say this but the lawyers got the paper, ok — if somebody walks by and grabs those statements out of his hand, now that person has the statements. What does that prove? All it proves is that person has the statements.
It doesn’t prove you owe that person any money. This whole thing about, “Oh, I got the statements.” A lot of times, the lawyers think like, “This is the gospel of truth here.”
No. It just means you’ve got statements.
There may be a dozen companies that have copies of the statements. It doesn’t mean a dozen companies can sue me or that I owe a dozen companies.
If I owe the debt to GE Money Bank and GE Money Bank has sold that debt, I only owe it to whoever truly owns that debt. Midland says, “We own it.” I don’t know, do you?
We’re in court.
Prove you own it.
They’ll say, “I tell you what I have.” They’ll take the purchase agreement and purchase agreement is just a contract. They sometimes act like there is no contract. You don’t buy $500 million worth of debt on a handshake or a text message.
No. There’s a contract. They’ll bring you the first page of the contract and they’ll say, “See. Here it is,” and written across it will say Purchase Agreement, it’ll say Midland and GE Money Bank agreed to sell the accounts listed in Exhibit A and there are no representations made other than what’s in the purchase agreement.
They’ll go, “See. Here it is. We proved it.”
It’s one piece of paper. This is the contract that you bought $500 million dollars worth of debt?
“Oh, well, no, no, no. See, this is the front page. This is all we’re gonna give you.”
If you bought the debt, why would you not introduce in the evidence the whole agreement. Their response is it is super secret.
That’s a little bit of a problem because Midland sued me in court so Midland has to prove it owns the debt.
They argue, “Yeah. But, I mean, we wouldn’t make this up”
As if all the stuff with the big banks, Bank of America, etc. making documents up, did that not happen?
Remember robo-signing where they had people signing thousands and thousands of affidavits a day to stake people’s homes. The people signing the affidavit said, “I swear. I swear. This information is accurate.”
Do you know what the problem was? They had a dead guy sign an affidavit. They just had a stamp just signing over and over, where they had the notary who said, “Yeah, this person really signed.”
They were dead. They just had them already notarized. Nobody was looking at this stuff.
Really? Some debt buyer that comes along and buy something for pennies on the dollar, they want to come into court and go, “Well, I mean, if we sued you, you have to believe us.”
Actually, I don’t believe you, so you have to prove it and bringing them one little piece paper ain’t going to prove it.
They go, “Oh, well, in addition to this, we have another piece of paper that has your account number on it.”
So what? What does that prove? Besides all that, a piece a paper isn’t gonna do it in my opinion. They had to bring a witness to say, “All right. Here’s the debt.”
This piece of paper will represent your debt — GE Money Bank has it. You’re being sued by Midland. How did they get from GE to Midland?
I understand this piece of paper exists but somebody has to come in and testify for GE Money Bank saying “Yes, we sold it to Midland.”
But what if GE sold it to another company who then sold it to Midland?
Now, you got to have more witnesses there. Let’s assume (I’ve never seen this happen but let’s assume) they can prove it goes from GE Money Bank to Midland.
Does Midland still own it or did they transfers to this guy over here? I don’t know. Somebody’s got to come and testify.
Here’s what these debt buyers say. They’ll say, “That is outrageous. We are not gonna send a witness and we’re not gonna prove all this stuff. We sued you. Remember, we get the statements. That’s all the proof.”
Well, let’s see.
Can the debt buyer get the statements in the evidence?
They’ll go, “This is unfair. This is gonna really be a burden on us.”
I tell you what. When I sue these debt collectors in federal court, Midland Funding, LVNV, Portfolio, Asset Acceptance, Unified, all these different debt buyers we sue in federal court, their argument is, “Yeah, I don’t have any witnesses. I don’t really have any paperwork because, you now, it’s kind of outrageous to expect me to prove my case in court. I mean, come on. I said that you did this bad stuff. That ought to be good enough.”
I will get thrown in jail by the federal judge if I did that in federal court.
These debt buyers often go to small claims or district court and argue, “Yeah. I don’t have anything. I shouldn’t have to prove anything.”
No? When I get sued and I get served, when I file an answer denying that Midland or Portfolio own this debt and that I owe you any money, then you do have to prove it.
That’s why we have trials. It’s easy to talk a big game but at trial they have to walk the walk. They have to prove it.
After Trial, What Happens?
Now, what happens at trial, let’s say they win. They proved you owe the debt. They proved they own it. They win. Now you have a judgment against you. You can either pay that judgment, you can do nothing and they will garnish your wages, garnish your bank account, same thing as a default judgment.
Or you can appeal it. You have 14 days to appeal it to circuit court.
What happens in circuit court? It starts all over, as if what happened down here in small claims or district court never happened. It’s because you have a right to a trial by jury.
What if you win at trial in small claims or district court?
Midland, Portfolio, whoever, they have 14 days to appeal it because they have a right to a trial by jury and we have no juries in small claims or district court.
What if you win and they don’t appeal it? What does that mean? What it normally means is you do not owe this debt. Midland sued you, said you owed $5,000. Now you have a judge that enters an order that says judgment for defendant. That means you do not owe Midland that money.
What are the implications of that?
Did Midland credit report that you owe them $5,000? Now we have an order. Midland started this fight. They started this lawsuit and they lost it — but they’ve been telling the world that you owe $5,000.
Now we know from this order, you don’t owe $5,000. Seems like a problem for Midland. They sued you and said you owe $5,000. It’s a problem. Before they sued you, they wrote a letter probably or had their lawyers, Zarzaur or Holloway and Moxley, write you a letter saying you owe 5,000.
It turns out that’s not true. This normally violates the Fair Debt Collection Practices Act (FDCPA) and other laws..
Then what did they do afterward? We have even had Main Street Acquisition, it’s a debt buyer. They sued our client and lost. Then they wait a year, year and a half later, they sue him again, the same debt. Main Street, same defendant, same debt, same court. The only thing they did is they switched collection lawyers because you can’t go back to the same collection lawyers and ask them to sue again because that’s like the most egregious, the just most horrendous example of a bogus debt collection lawsuit. Once you lose, it’s over. They did it again.
We see that.
Sometimes we see people continuing the credit report. We see debt collectors, debt buyers, writing you letters saying, “You still owe the money.”
Had a collection lawyer even say, “Pay us the money. If you don’t pay us, we’re gonna sue you.”
It’s like, “Do you remember we already went down this trail?”
When that happens, they owe you a bunch of money because you’re going to sue them if you choose to do that. If you’re successful, pretty terrible conduct for the debt buyer to do that.
I hope that this big picture overview is helpful to you. I haven’t tried to get into all the details, all the exceptions to the exceptions, but just to give you a big picture.
I’ve been sued. What do I do? If I want to try this on my own, how do I handle that?
I hope this is helpful.
My name is John Watts.
You can contact me at 205-879-2447.
If we can help you in any way and you live in Alabama, just reach out and touch us. Give us call, contact us through the website.
If you found this video and article to be helpful, please share or you can comment below.
We appreciate you helping us to get the word out there so that people will not have a default judgment but, instead, will take action.
I want to congratulate you because I know that you’re going to take action after watching this.
Let me know if I can help you in any way. Thanks. Have a good day.