Adjudication on the merits means debt collector who sued you cannot credit report on you or continue to collect against you!
So you have been sued by a debt collector (or even an original creditor). You get the case dismissed with prejudice and then the collector (or creditor) is still collecting against you. Is this legal or illegal? What in the world does the expression “adjudication on the merits” mean for you (hint: its a good thing!).
Possibilities when you are sued by a collector in a collection lawsuit
- Judgment for plaintiff (the one who sued you)
- Judgment for defendant (you the consumer)
- Dismissal without prejudice
- Dismissal WITH prejudice
Let’s start with the easy one — debt collector gets a judgment in their favor
If the plaintiff — maybe LVNV Funding or Midland or Portfolio — gets a judgment against you, then it can execute on that judgment. In Alabama (and most but not all states) this means wage garnishment, bank garnishment, liens on property, and even the forced sale of your assets (“sheriff’s sale”).
So collection would be appropriate here.
What if the judgment is in YOUR favor (defendant verdict) against the collector?
If you won your case — and there was no appeal — then in my view this means that the collector cannot collect against you. At all.
No credit reporting — because you won. Check your credit reports — your real ones — to see if this account is reporting. You can save/print to PDF your reports from Equifax, Experian and Trans Union. No charge to do this!
No phone calls — because you won.
How about letters or emails or texts? Nope. Because you won.
This is an adjudication on the merits which simply means the judge ruled in your favor and the case has been decided.
How about a dismissal withOUT prejudice of the collector’s suit?
This is NOT an adjudication on the merits. While the case was dismissed (a good thing), there was no ruling on who wins or loses.
So in Alabama (and most but not all states) this is treated as if there was no lawsuit. (Which may mean the statute of limitations has expired for the bad guys to sue you again so that can be a big positive!)
If the collector could credit report or call or write or do any other collection activity before filing the suit, then they can do it after the dismissal withOUT prejudice.
EXCEPTION: If you answered, and disputed the debt, then the collector cannot update your credit report without marking your account as “disputed” — this comes from the FDCPA. The FDCPA is the Fair Debt Collection Practices Act.
Section 1692e(8) says this is illegal:
(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.
So definitely check your credit reports at https://www.annualcreditreport.com/index.action to save to PDF Equifax, Experian and Trans Union.
Finally, what if the collection lawsuit is dismissed WITH prejudice?
Like a judgment in your favor, this is an adjudication on the merits.
It means you won.
So there should be no collection activity after this type of dismissal.
If a collector is credit reporting, or calling or writing, then you should look to see if you can sue.
If the original creditor sued you and the case was dismissed WITH prejudice, then you’ll need to dispute the credit reporting and when it is not fixed, then you sue.
The key when sued is to not allow a judgment against you. You want either to win the case with a judgment in your favor or dismissal with prejudice. A dismissal withOUT prejudice is small victory but it does beat a judgment against you.
If you are in Alabama, feel free to reach out and we can chat about what happened and whether the collection or credit reporting you are facing now is legal or illegal.
Always feel free to call us at 205-879-2447 or fill out our contact form.