Your 5 options when sued by a debt collector in Alabama
UPDATE — We have two videos for you to watch — a shorter one (24 minutes) and a longer one (above) which discusses your five options and answers many common questions we have been asked over the years by consumers all over Alabama. You can also find the transcript of the longer video here where we discuss your five options when sued by a debt collector.
You have been sued by a debt collector or debt buyer — LVNV, Midland, Portfolio, etc — and you want to know your options. (If you want to see a 35 minute video discussing the overview of the entire debt collection lawsuit process in district or small claims court then click the link).
Welcome to this article and video as I believe this will be very helpful to you anywhere in Alabama. We represent consumers just like you in all parts of Alabama.
“What is the statute of limitations on a collection lawsuit in Alabama?”
This is a reasonable and simple question but unfortunately there is a lot of controversy on the answer to this seemingly simple question. Fortunately this does not particularly matter as in hundreds of cases we have only relied on the statute of limitations one time, if even that one time. Every other case we rely on the debt buyer must prove you owe the debt and the debt buyer owns the debt.
But let’s talk a moment about the statute of limitations.
We say it is 3 years — the statute of limitations for an “open account” which is what a credit card is in Alabama.
[For car loans it normally is 4 years so if you are sued by AutoVest or some other debt collector on car loans, contact us and we can guide you through this analysis.]
The collectors say it is 6 years as they sue under “breach of contract” or “account stated.”
The problem with a breach of contract is normally the debt collector shows up without the proof of what the contract actually was — the “terms and conditions” or “credit card agreement” so it is a bit difficult to talk about the terms if you don’t have them. Besides this, I believe the open account is actually the proper legal theory.
On “account stated” theory, this doesn’t fly in my opinion. This is where there is, in essence, a brand new contract which changes an open account to a stated account. The example is perhaps your CPA does not have you fill out a payment plan but instead sends you a bill for doing your taxes. After a few bills, the CPA may send one letter or “statement” showing all the charges and all the payments — this is an account stated.
The collection lawyers say this is what the credit card statement is for but that misses the point — the credit card company would gasp if it found out it was forming a new contract with you every month it sent a statement. There are all sorts of Truth in Lending Act (TILA) disclosures that would be triggered in a new contract.
Here’s the bottom line — I think it is 3 years. They say 6 years. But as you’ll see below the critical issue is really does the debt buyer own the debt.
So let’s start at the beginning — you have been sued — what is the biggest danger facing you right now . . . .
“What is the biggest danger to me in this lawsuit?”
Doing nothing.
If you do nothing, the debt buyer will get a default judgment against you.
You lose.
You get your bank account garnished.
Your wages are garnished.
You have a lien put on your property.
Even have your car or home sold! This is a “sheriff’s sale” — it is unusual but it happens. I saw one about to happen on a paid for house worth 6 figures and the default judgment was $5,000.
Unbelievable but it is true.
So do something.
Take action. You’ll need to be willing to take massive action — either spending time or spending money to get to a good solution to this problem.
But sometimes folks believe there is no hope as everyone tells you that you cannot win your case. True?
Let’s see . . . .
“Is it really possible to win a collection case?”
Yes.
We have done it.
Many of our clients who we currently represent in federal court against debt buyers won their case while representing themselves.
Will you win your case? I have no idea but it is possible.
Keep in mind the debt collector has two jobs at trial:
- Prove you owe the debt sued on AND
- Prove that the debt buyer owns the debt it sued you on.
It has to do both — if it does and if you have no valid defense then the collector wins. If it doesn’t prove both, you should win.
Remember the collector has to prove it owns the debt which means . . . .
“What do you mean that the collector has to show I owe the debt and it owns the debt?”
Let me give you a crazy example.
Imagine you rent your house or apartment for $1200 a month.
I sue you — crazy, right?
I sue you and say you owe me back rent as you haven’t paid this month’s rent.
In trial, I get you to admit the following:
- You don’t own your house
- You have a lease for $1200 a month
- And, you did not pay last month’s rent
I proudly announce to the judge that “I’m done — I proved they owe me $1200 a month in rent.”
The judge would say, “Mr. Watts, what are you thinking?!?! All you proved is the defendant owes someone $1200 a month. You didn’t prove they owe you the money.”
You see, I proved you “owe the debt” but I did not prove I “own the debt” so I lose.
Same thing when these debt buyers or debt collectors sue you.
So Midland sues you for a Chase credit card. And it proves you owe $5,000 on the Chase card.
So what?
Midland has to prove that it — Midland Funding — owns the debt. Otherwise anyone could sue anybody for any debt. That’s not the law — instead the law is that you sue for a debt that is owed to you, not to someone else.
It is this critical step — proving the debt collector owns the debt — that is so challenging for the debt collectors.
So with this in mind, let’s look at your five options . . . .
“What are my five options when I’ve been sued?”
You have five (5) basic options when sued:
- File bankruptcy (primarily chapter 7 or “straight bankruptcy”)
- Fight the lawsuit on your own
- Settle the lawsuit on your own
- Hire a lawyer to fight the lawsuit
- Hire a lawyer to settle the lawsuit
Let’s take a look at each one of these. If you are ready to chat with us, call us at 205-879-2447 or click here to send us a message so we will call or email you back ASAP!
The first one is the extreme solution of bankruptcy — probably not the right answer for you but occasionally it is….
Then you have two “do it yourself” options where you do not hire a lawyer.
Finally, there are two options that relate to hiring a lawyer.
Let’s take a look at these options….
OPTION ONE: BANKRUPTCY
This is to wipe out the debt — by filing a chapter 7 bankruptcy. Or it can (rarely) be a chapter 13 where you pay all or some portion of your debt over 3-5 years.
Advantages
-
- A chapter 7 bankruptcy wipes out most of your debt, including the lawsuit
-
- Once you file, the lawsuit has to stop (“automatic stay”)
Disadvantages
-
- You have a bankruptcy on your record
-
- Damages your credit report
-
- Lawyer fee and court costs of bankruptcy must be paid before filing at least a chapter 7 bankruptcy
OPTION TWO: FIGHT THE CASE ON YOUR OWN
Advantages
-
- No lawyer fee as you are representing yourself
-
- If you win, you may be able to sue the debt collector who sued you
-
- You are in control
Disadvantages
-
- You don’t have a lawyer representing you — the debt collector does
-
- Must understand the rules of court as the judge is not your lawyer
-
- You won’t spend money so you must spend time getting ready for the case
-
- If you are sued in Circuit Court, this is very difficult to do on your own
OPTION THREE: SETTLE THE CASE ON YOUR OWN
Advantages
-
- No lawyer fee as you are representing yourself
-
- Once you pay the amount settled for, then the case should be over (though you must verify this)
-
- Once you pay, your credit report should be updated to show you paid the debt off (verify this)
Disadvantages
-
- You don’t have a lawyer but will be negotiating with the lawyer on the other side representing the debt collector
-
- You may get hit with taxes on the settled portion of the debt (1099 issued in January following the settlement)
-
- The debt collector account will still be on your credit report
-
- Must make sure the settlement is what you agreed to and verify the debt buyer is doing what it promised to do
OPTION FOUR: HIRE A LAWYER TO FIGHT THE CASE
Advantages
-
- The debt collector has a lawyer and now so do you
-
- Your lawyer should file the answer in the case for you
-
- Unless you are needed or subpoenaed, your lawyer will normally not need you at trial
-
- Winning means you don’t owe the debt collector and you can often sue the debt collector under the Fair Debt Collection Practices Act (FDCPA) and other laws
-
- You must feel you have a better chance of winning or else you should not hire the lawyer
Disadvantages
-
- You have to pay a lawyer fee with no guarantee of winning the case
OPTION FIVE: HIRE A LAWYER TO SETTLE THE CASE
Advantages
-
- You will have a lawyer helping you to settle the case instead of you negotiating directly with the lawyer on the other side
-
- Option of having the credit reporting deleted by the debt collector
-
- Since disputed debt, there may not be any 1099 issued or if it is you may have grounds to fight it
Disadvantages
-
- Have to compare the total cost of settling with a lawyer compared to settling it on your own and if it is more expensive to hire a lawyer, do you get additional benefits that make it worth the cost?
So which option is best for you?
I have no idea. 🙂 Seriously, you have to consider all of your options to find the best one for you. Do you have no money but plenty of time? Do you have a ton of other debt and you just lost your job? Or, do you have money but not much time to handle this on your own? How much were you sued for and in one court? Here’s what I suggest. Watch the video. Make notes. Decide what you think is going to be your best option or options. Then let’s talk and I’ll help you discover the best option for you. You can call us at 205-879-2447 or or click here to send us a message so we will call or email you back ASAP!
I look forward to hearing from you….
As someone that has been involved in litigation for more the last year and has filed some things pro se as well as hired attorneys to represent me,Sometimes both may be necessary.In the long run,it may take a while to find the right attorney,but when you do…They are worth every dime spent.
Thank you John,You are both caring and inspiring.
Sincerely.
Gloria Johnson
Reply
Excellent comment Gloria!
There is no single “right answer” when it comes to being sued.
Sometimes I recommend to folks that they hire a lawyer. Sometimes they file bankruptcy and then I get them to a bankruptcy lawyer. Often I recommend they fight the suit on their own or they settle it.
Even when I “know the answer” I still walk folks through the 5 step process. It is useful to make sure we don’t miss anything and it also gives consumers (and me) confidence that whatever decision made is the best decision.
Thanks for the kind words — means a lot!
John Watts
Alabama
Reply
What should I do if they have sued and garnish my wages but still don’t know what I’m being sued for
Reply
Sherry
Were you served with the lawsuit?
Did you answer the lawsuit?
If you are outside of Alabama, get with a lawyer in your state. If you are in Alabama give us a call at 205-879-2447 and Carolyn will help you figure out what you are being sued for….
Then we can help you figure out your options….
John Watts
Reply
I did not have much idea about the default judgment that is given in the favor of debt buyer. Is there any way to get back on the debt buyer in such situation?
Reply
Mark,
I’m not sure I understand the question.
If you mean to get back on track paying, then yes they usually will let you make payments.
If you mean sue the debt buyer, that is only if they have broken the law. And it can be challenging when you lose a case to then go back and sue for anything done in the lawsuit. This does vary by state.
So if you don’t mind clarifying then I’ll be happy to answer as best as I can. Maybe because it is a Friday my mind is not moving as quickly as it should. 🙂
John Watts
Reply
I’m glad that you’ve explained the options really well. Thanks for the article, keep up the awesome blog!
Reply
Welcome Patrick — thanks for the kind comment….
John Watts
Reply
I received a call from someone today who claimed to be a lawyer trying to issue a judgement against me for something that was last paid in 2008 (credit card). When I do research on the guy he said he was working on behalf of harbour financial services, I have a letter they sent me and wanted me to e-sign, but I havent, nor will I, I do not feel comfortable. I cant find anything about them on the internet and it scares me. I called today and had my debit card deactivated because the paper says that I authrorize them to charge it, and I did not. When I look up the address on their letter it comes up as ontario canada and for a company called Davinci virtual office. Sounds really fishy to me. I am going to try to copy and paste it here. Does it look legit to you?
Harbourside
337 N Vineyard Ave Fourth Floor
Ontario, CA 91764
Office: 951.893.4640 Fax: 855.710.7059
*Personal and Confidential*
(name removed)
File Number: 20xxxxx-01
RE: Original Creditor: JUNIPER BANK
Original Account: xxxxxxxxxxxxx26 (I removed)
Balance: $7,248.14
Current Owner of Debt: Harbourside
OFFER OF SETTLEMENT
This office has been retained to collect the above-mentioned debt, originally owed by you to JUNIPER
BANK. Harbourside agrees to accept, as full and final payment for the above-mentioned debt, the
sum of $2,250.00, provided that said sum is received in our office on or before close of business, on the
due date of October 31st, 2016.
Upon timely receipt of said funds, and after said funds have cleared the financial institution from which
they are drawn, Harbourside will release you from any and all claims and liabilities pertaining to this
account. We will also update our records to show that the obligation has been fully satisfied.
Please note that there is no grace period. All funds must be received in our office on or before the due date of
October 31st, 2016, discussed above, and the “Settlement Agreement” and “Payment Authorization Forms”
attached hereto, must also have been signed by you, and timely returned to our office, by said date.
If you are unsure whether the payment will be received in our offices on or before the due date, you may contact
the undersigned Resolution Specialist to obtain instructions for sending funds via OVERNIGHT DELIVERY
SERVICE or to pay using a CREDIT or DEBIT CARD. Please feel free to contact us at any time if you should
have any questions regarding your account.
Sincerely,
Giovanni Xavier Mitchell
Resolution Specialist
September 24th, 2015
*IMPORTANT*
NOTICE
Harbourside
337 N Vineyard Ave Fourth Floor
Ontario, CA 91764
Office: 951.893.4640 Fax: 855.710.7059
PAYMENT AUTHORIZATION FORM
Name and address removed
File: 206xxxxxx
I _______________________, authorize Harbourside to process the below referenced account for
the amount of:
$250.00, to be charged on or before (if specified) on 09/24/2015; Authorization Code: 04xxxx
$250.00, to be charged on or before (if specified) on 10/02/2015
$145.84, to be charged on or before the last day of each month starting on 10/31/2015 until the
final payment is received on or before 10/31/2016
Card Number: XXXX-XXXX-XXXX-xxxx
Expiration Date: 04/2017
CVC code: xxx
Address: P.O.
City, State, Zip:
DATED: ___________ BY: ______________________________
LISA
Please sign this Payment Authorization Form and return to our office immediately via fax, email,
or grounds shipping. Harbourside requires ALL documents (i.e. letter of approval, and all
receipts) be signed and returned prior to issuing a zero balance letter once final payment is
processed.
Harbourside
337 N Vineyard Ave Fourth Floor
Ontario, CA 91764
Office: 951.893.4640 Fax: 855.710.7059
AGREEMENT
I, LISA (removed), agree that I owe the sum of $7,248.14, as a result of expenditures made on
my JUNIPER BANK account number 5xxxxxxxxxxx; to Harbourside, the current owner of
said JUNIPER BANK account.
Harbourside and I have agreed to settle the above-mentioned debt for the sum of $2,250.00
as full and final payment on this account, provided that said funds are paid to Harbourside, on or
before the due date of October 31st, 2016.
Furthermore, once said funds are received by Harbourside, and once said funds have
cleared the financial institution from which they are drawn, Harbourside, agrees to release you
from any further liability with respect to this debt.
I also understand that in the event my payment is not made on or before the due date, or,
in the event my payment does not clear the financial institution from which it is drawn, the full
amount of $7,248.14 will be owed by me to Harbourside, plus interest, at the legal rate of 10%
annually, from the date of this agreement.
DATED: ________ BY: ____________________________________
LISA (removed)
DATED: ________ BY: ____________________________________
Giovanni Xavier Mitchell- Resolution Specialist
Harbourside
337 N Vineyard Ave Fourth Floor
Ontario, CA 91764
Office: 951.893.4640 Fax: 855.710.7059
The Privacy Act of 1974 (Pub.L. 93-579, 88Stat.1896, enacted December 31, 1974, 5 U.S.C.§552a) establishes a
Code of Fair Information Practice that governs the collection, maintenance, use, and dissemination of personally
identifiable information about individuals that is maintained in systems of records by federal agencies. A system of
records is a group of records under the control of an agency from which information is retrieved by the name of the
individual or by some identifier assigned to the individual. The Privacy Act requires that agencies give the public
notice of their systems of records by publication in the Federal Register. The Privacy Act prohibits the disclosure of
information from a system of records absent the written consent of the subject individual, unless the disclosure is
pursuant to one of twelve statutory exceptions. The Act also provides individuals with a means by which to seek
access to and amendment of their records, and sets forth various agency record-keeping requirements. *Harbourside
is a collection company, and is attempting to collect a debt. Any information obtained will be used for that purpose.*
Reply
Lisa,
Looks fishy to me. Ask them to send you a real letter — real stamp — through the postal system. That tends to separate out the legit collectors from the bogus ones.
The ones committing fraud hate to use the postal service.
Now legit collectors can still break the law but at least there is a real company to sue when they do this.
If you are in Alabama give us a call at 205-879-2447 and ask to speak to Carolyn — she can set us up a call thanks!
John Watts
Reply
ARA debt collections LLC called me and used intimidation and threnend to sue me in federal civil court?–for a over twice out SOL. credit card debt One of them yelled at me and I was told if a payment was not made by the end of 09/2025 then they said they would see me in court. what are the chances that win a judgement against me if I offered a settlement with them if they would send me a letter releasing me from futher obligation of the debt –which they said they would do–but did not send a letter. They also said that they had sent me several letters offering a reduced settlement -which I never received, how can they prove that they sent me the letters. I never not got any letters from them.better business buro has them listed as an F Also I read many blogs about them that stated that will violate the Fair Debt practice Act. Can I sue them for the violations? I am medicated for high stress and this has caused me to be really stressed out. When I get stressed out I can not think clearly-so the extra stress has caused me many problems –Does a offer of a reduced settlement reset the SOL? I just made the the offer to get them off my case–then I found that that they had not lied up to what they said. What are ny chances of winning a positive settlement of dismissal in court if I represent myself. I know I .have to tell the judge that the debt is way out SOL Any advice would be highly appreciated. Respectfully Yours Morrell
Reply
Morrell,
I’m not familiar with this outfit but it has all the normal indicators of being a scam place. Unless the debt is over $75,000 they can’t sue you in federal court normally.
With these scam type places I always suggest telling them they need to send you a real letter in the mail and explain what they claim you owe, how they own it and what will happen if you don’t pay.
Almost always they go away.
Legitimate collectors — even ones that break the law — don’t threaten to sue in federal court over a credit card debt.
If you are in Alabama give us a call at 205-879-2447 and we will be happy to look at any information you have on them to see if they are legit and if you need to look at suing them in federal court for violating the Fair Debt Collection Practices Act (FDCPA).
Best wishes
John Watts
Reply
I think you really hit the nail on the head the “loose” statue of limitations. Collectors are relentless when it comes to pursuing a debt and are, in my experience, often “loose” with their moral standards of honesty. Great article!
Reply
Thanks for your comment!
John Watts
Reply
Can I still try to settle with midland even if I have received a court date
Reply
Yes — anytime before the judge rules.
So if you want to talk to Midland, you can do that even after you file your answer and even after you get a court date.
Hope that helps — if you want us to help you think through your options in an Alabama collection suit with Midland, call us at 205-879-2447.
Thanks
John Watts
Reply
John, your videos are nothing short of awesome, and cover every detail. I have been served by Blitt & Gaines, being sued on behalf of Bank of America for 13k. I have been on the fence about what to do, but with my income tax return I can raise about 7k in a lump sum. Should I just give them a call and make an offer? I want to, just to get this taken care of and behind me, but I am not sure what I will say if they give me a stern “NO”. Can you give me any advice? Thanks!
Reply
Brad,
Thank you for the kind words!
Why don’t you do this — call my firm if you are in Alabama — 205-879-2447 and we can talk about the options. Tell Carolyn we connected and I wanted to chat with you.
There are several aspects to this including credit reporting so I would like to walk you through it.
Thanks!
John
Reply
I’m currently getting sued for a Deficiency balance on a car loan worth 6132.50 , I am only getting one income which is my one job and I’m a single mother of 1. A lawyer took my case but withdrawn from it because he said I should throw in the towel and let them get their judgement. I don’t have a court date just yet. But will they accept any type of monthly payments until I get on my feet to pay the debt off? I don’t want to file bankruptcy but I also have medical debt also. I’m only 21 and don’t know where to turn to.
Reply
Jada,
I’m going to answer this assuming you are in Alabama. If not, you need to check in your state.
Most of the time in an auto deficiency case the other side will accept monthly payments.
Few thoughts for you:
1. Is this the original car loan company suing or a debt collector? Makes a big difference on fighting or settling. You can read about Velocity and Cascade — two debt collectors who sue on old car loans.
2. Will the company want a consent judgment if you make payments? We are not fans of consent judgments.
3. They may want to see your financial situation if you are asking them for help — that seems fair to me. They have no obligation to do a monthly settlement plan so if you are asking, don’t be surprised when they want to know about your financial situation.
4. You may want to talk to a bankruptcy lawyer about your options — I would be very hesitant at your age but it is an option to look at.
Assuming you are in Alabama give us a call at 205-879-2447 and we’ll be glad to chat with you.
Thanks!
John Watts
Reply
I watch your YouTube about the the collection company law suit, and it is very informative and thank you.
I received a letter from a law froup, LLP represent MIDLAND FUNDING LLC for original Creditor CITIBANK with the amount that I don’t remember that I owed.
I wish that you’re in California. I wonder if you know any attorney in Orange County, California for low income senior is working, but have too bills.
Reply
Jan thank you for your comment.
I don’t know any specifically but here is a great place to start your search — https://www.consumeradvocates.org/find-an-attorney
Best wishes!!
John Watts
Reply
This website came just in time. Was served a couple of days ago with a summons. Being sued by Midland funding, LLC on a debt I don’t remember owing. Debt was bought from Synchrony bank. They say I have 14 days to answer. Before I answer or make a call to their lawyers, what should I do?
Reply
SB if you are in AL fill out our contact form and we will give you a call to go over your options.
Thanks!
John Watts
Reply