Transcript of webinar on Alabama debt collection lawsuits with John G. Watts

(This was a webinar from a few years ago — the information is still valid and we wanted to put this out here as we hope it will be helpful to you!)

We’re going to answer some questions about debt collection suits and dealing with debt collectors. It’s one of the most common areas of questions that we get because there are just simply so many collection law suits out there.

We talk about this in other videos, but take a company like Midland Funding. They file a hundred lawsuits in Alabama every week.

We’ve got, let’s see, five questions and unless we have any live questions while we’re doing this.

I’ll just start with the very first one.

“Can you be sued in a different county than where you currently live?”

It’s a great question because in this society, we might start off over here, and then we move somewhere else, and then we move over there.

Where are you supposed to be sued?

If we’re dealing with a consumer debt, that’s something that’s covered by the FDCPA – The Fair Debt Collection Practices Act.

Then, you can only be sued in a county where you live or the county where you took out the credit card, the medical bill, whatever it might be. Whatever that kind of underlying debt is that you’ve been sued on.

I’ll give you a recent example.

A lady took out a debt in Madison County. Then, she lived in Lauderdale County for a little bit and now, she’s in Jefferson County. They sued her in Lauderdale County. Is that proper? It’s not where she lives.

The suit is not where she created this debt, so that would be an improper county. What does that mean?

Under the FDCPA, if they sue you in the wrong county, then that’s a violation of the FDCPA.

So we look at kind of the whole spectrum and say, “You know, if they’ve done everything else right but they sued us in the wrong county and it’s a very understandable mistake, do we do anything about it?”

Typically not, but if they sued you on a debt you don’t owe, and they come to court they have no proof, and they do false credit reporting, and they do this and they do that, and they sued you on the wrong county, absolutely, you just stack this on top of the other violations.

They’re just doing one violation after another, which is wrong. They sued in the wrong county and please keep in mind, Alabama courts have their own rules about where you can be sued, where you cannot be sued.

They don’t always line up perfectly with the FDCPA.

In Alabama Court, we might say we have more options on where to see. Under this federal law, the FDCPA, a debt collector has to comply with that. If they want to ignore it, that’s fine but then they can’t whine about, “I can’t believe we got sued and how terrible it is.”

You know you’re violating the law so deal with the consequences.

Our next question is, “What is the difference between Circuit Court, District Court, and Small Claims Court?”

Circuit court is kind of our big court. It’s a court where you can be sued for a million dollar or billion dollars, and that’s where we have jury trials. Typically, we’re seeing cases that are around $10,000 or above, get in Circuit Court. That’s the highest trial court we have in Alabama.

Beneath that, is what’s called District Court, and that goes up to $10,000. There’s no jury trial in that. Then, beneath that we have something called Small Claims Court to it. Circuit Court, District Court, Small Claims Court. It used to be, I think, $3,000 was the limit and now it’s been raised up to I think $6,000.

Typically, you have the same judge and courtroom in Small Claims and District Court. There are some different rules. Small Claims rules are a little more relaxed. The District Court has the same rules as far as evidence as in Circuit Court.

Now, the big difference is, in Circuit Court you can do what’s called “discovery” and the collector against you can do a discovery. Interrogatories, request for production or request for admissions, and depositions.

We talk about those in other videos.

In District Court, it’s pretty rare that that ever happens.

In Small Claims, absolutely no discovery, so different levels there.

If you are sued in Small Claims or District Court, and you’re unhappy with the result, you can appeal it to Circuit Court.

That means that it starts completely from scratch, as if what happened in Small Claims or District Court never happened.

Hopefully, that helps you to get a little bit of perspective about the courts.

Our third question is, “What do I do if I find out my bank accounts have been wiped out (garnished) by the collection law firm?”

This question came from somebody that, I think it’s over the holiday weekend. They’re having a great time. All of sudden on Monday, boom! Bank accounts are wiped out (garnished). What in world happened?

The very first step is, you look and say, “Okay. Do I have a judgment against me?”

Maybe there’s a judgment way back in 2005, 2010, even earlier than that. Now, here we are in 2015 and boom! It pops up for the first time. You never knew about it because you’re never served.

You’ve got to know, is there a judgment? You look that up, you call the court.

If your bank account’s been garnished, typically your bank will have an indication of which court case that came from. You call the court.

Over in Alabama, you can contact us. We’ll look it up for you.

Our phone number is 205-879-2447.

You can ask to speak to Carolyn in my office and she’ll be glad to look that up for you.

Is there a judgment?

If there is a judgment, were you served?

Did you, under the definitions of the rules, did you get a copy of the lawsuit and did you get it in the right way?

Normally, it’s personally delivered to you, sent by certified mailed to you, or they give it to an adult who lives in your house where you live at the time that those papers were handed.

Typically, that means you’ve been served validly.

If you were not served and particularly if you never knew about this until you were garnished, then you attack that service.

If you can make that service go away, it’s almost like here’s the judgment, it rests on top of you being served.

If you pulled the service out, and you show the court, “I wasn’t served.” That judgment just falls apart. It doesn’t make the lawsuit go away. Lawsuit is s still out there.

You’ve got to deal with the lawsuit, but you’re in a much stronger position. Now, you have the opportunity to defend yourself, you’re not being garnished, your wages, your bank account.

That’s the number one step.

What if you say, “You know, I remember being served. I just ignored them.” That’s going to be very difficult, if not impossible to attack that service, so this judgment stands.

What do you do now?

You can look into filing bankruptcy.

You can look at doing a lump sum settlement.

Or, you can do a monthly settlement with them, with the collection law firm.

Now, you can do that on your own or you can hire a lawyer. We’re not going to get into all those details in this webinar, but I’ll say you must have a plan.

You need to know how you’re going to negotiate and make sure whatever deal you get is actually honored by the collector.

Say there’s a $5,000 judgment, you talk with the lawyers, they say, “Hey. If you pay us three, we’re done.” You’ll go, “Great.”

You pay them $3,000 and then six months, they come after you garnishing $2,000. You say, “I was done.” They go, “No, no, no, no. You just payed $3,000 and you still owe $2,000.” 

Look, if that happens, you may still be able to sue the debt collector for lying to you if you’ve got sufficient proof, but the safe thing to do is have this in writing.

Make sure, if you do that on your own, make sure you negotiate a good deal and then underneath that, you get it rock solid. That is just rock solid. There’s no question about what the deal is or is there any misunderstanding down the road. Of course, you can hire a lawyer.

Of course, you can hire a lawyer if you want a guide and don’t want to have to do this on your own.

If you’re in Alabama or this is a judgment in Alabama, you can contact us. We’ll be glad to give you options.

Normally, what we do is, if we know we’d been served, then we will look at your situation, give you a quote as far as a fee and then usually, if we cannot get it settled, then you don’t owe us that money. I’m not sure if I’ve ever done it differently actually, but the idea is you’re going to pay us that money if you get settled.

Now, if it’s an invalid service where we can attack that judgment so the judgment falls.

Ok, on to our next to the last question.

“What happens if I ignore the Nathan and Nathan lawsuit they filed for NCSLT?”

Now, let’s define a couple of terms.

Nathan & Nathan is a large Birmingham collection law firm and NCSLT is the National Collegiate Student Law Trust. Along with a law firm called “Scott & Associates” Nathan & Nathan files the NCSLT cases.

The question is, what if I ignore it?

What if I ignore the lawsuit?

What if I ignore the collection letters from National Collegiate Loan Trust?

Typically, you’re going to get sued.

They file a lot of lawsuits every month. These are not $3,000, $4,000 lawsuits. These are $20,000, $50,000, $150,000 lawsuits on private student loans.

If you ignore it, you’ll get a judgment. I can’t tell you the number of people come to my firm after a judgment is entered in favor of NCSLT.

The clients tell us,

I saw something on the news.

They said they couldn’t sue on student loans.

Or “this National Collegiate Student Loans is not a legitimate place.”

No.

They can sue you.  (There is a lot of abuse and you have defenses but they are allowed to sue if they follow the law).

They can touch your bank account, garnish your wages, etc.