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Now the fun starts - they have an Attorney

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What's the worst thing a creditor can do to you? Sue you    because a successful suit gives the creditor a judgement    and a judgement gives the creditor the right to not only look for assets of yours    but to take those assets away when they find them. (If you have read my other threads    you have already made that a virtual impossibility.... hint    hint    hint)

What's the worst thing you can do when a creditor sues you? The answer is - DO NOTHING. You just rolled over and played dead and allowed your creditor to figuratively walk all over you. This essay will give you some ideas on how to deal with a lawyer representing a creditor.

The creditor's lawyer may be an in-house attorney or may be an outside attorney. if the creditor and the attorney are located in different cities or states    the attorney is probably an outside attorney. The difference between inside and outside attorneys is like night and day.

The inside attorney is paid a salary. That    and the filing fees    are just about all the creditor's legal overhead. The outside attorney usually bills the creditor by the case if he gets a Default Judgement    or by the hour if no default judgement can be gotten. The outside attorney relies on the debtors lying down and playing dead    so a default judgement can be obtained.


<<Keep in mind that I am an accountant    not a lawyer. While I have successfully done everything I suggest in this and every other post I make    it is not to be considered legal advice.>>>

A law suit starts when one party to the suit feels aggrieved enough to pay the Clerk of the Court a filing fee and obtain a Docket Number for a Summons and Complaint. The Summons part is notification to the defendant that there is a suit filed    and that an Answer must be filed within a certain time period. The Complaint gives the details of the reason for the suit. Failure to file the Answer gives the plaintiff the right to seek a Judgement by Default    or Default Judgement. Filing a timely Answer preserves the Defendant's right to a Trial and eliminated the possibility of a Default Judgement.

The economics of a suit are simple - lawyers don't work for free. The Creditor's Lawyer makes more money per hour going to Court with 100 cases - all of which failed to file an Answer - and getting 100 Default Judgements in the 15 minutes it will take    than he will make working his tail off prosecuting ONE case. Lawyers LOVE Default Judgements    and therefore Debtors HATE them. Don't EVER allow a Default Judgement to be entered against you. File an Answer to every summons - even iof it's just a General Denial.

When you file an Answer to a lawsuit    YOUR case has to be removed form the lawyer's pile of potential Default Judgements and has to be handled singly. This will result in your CREDITOR being assessed additional legal fees - fees which probably cannot be passed along to you    since most contracts contain a boilerplate "attorneys fees in event of default will be X% of the amount owed."

1. File an Answer. Go to the Court House and ask to see some examples of Answers to Civil Complaints so you can see how they are done. Copy their format and suit them to your case. Even if every allegation made by the creditor is 100% correct and accurate    it isn't so till the Judge says so. Deny everything. It's called a General Denial.

2. File a Counterclaim. Find ANY reason to sue the creditor in return. No matter how frivolous. Let the Judge decide the issues    don't surrender the victory to the creditor. I have interposed counterclaims for (a) damage to my home caused by an oil company that spilled oil    (b) Loss of sleep and Loss of Consortium (that means sex with my wife because she was tired also) because the creditor's personnel called me at inconvenient hours and (c) the goods sold to me on credit didn't fit    didn't look quite right    were off color    didn't last as long as I thought they should.... ANYTHING at all.....

The Answer and the Counterclaim are usually filed in the same document. DO IT.

Next..... send your creditor on a paper chase.

In order for a business to have the right to sue a natural person in Court    certain legal niceties must be observed. You will now give your Creditor a chance to prove they have all been met. You will do this through a process called pre-trial Discovery. Send to the attorney a document called First Set of Interrogatories.

1. The business must be organized in some State. Demand a Certified Copy of those documents.
2. Your creditor    if organized in another state    must be licensed to do business in your state. Demand a certified copy of those documents.
3. The right of a business to use the Courts is conditional on the business' tax filings being current. Demand a Certificate of Compliance from the Plaintiff's home state and YOUR state.
4. Demand a list of Officers. In most States    only Officers of a Corporation    or their attorneys    can sign Pleadings. The answers to your Interrogatories are a Pleading.
5. Demand a full accounting of all money into and out of your account since its inception.

You should get the idea by now. make them prove (a) their existence    (b) right to sue (c) right to sue in YOUR state    (d) right to sue YOU    (e) damages    etc.... In other words    send them on a paper chase. The purpose of this paper chase is two-fold: To tie them up with internal labor costs and (b) to give you ammo for future and additional interrogatories.

You can research your state's Civil Court rules of procedure through - it is a gold mine for pro-se litigants (people who go into Court without a lawyer).

Next you will set up a ticker system whereby you will watch the calendar. The Rules of the Courts give a certain time under which the Interrogatories must be answered. If they are not    file with the Court a Motion to Compel. The Motion to Compel is asking the Judge to Order the plaintiff to answer the Interrogatories    Failure to do so would preclude (prevent) them from using that information against you.

By filing enough Motions and enough Interrogatories    you should be able to drive your Creditor's legal bills so high they will be agreeable to a settlement. As a strategy    a month before trial    I send a letter asking for a settlement Conference. That letter is usually ignored and it looks very damning in Court    since Judges LOVE settlements and HATE parties who force trials.

I realize this is general - since there are 52 different legal systems in this country (50 states    DC and Federal) I can't give a specific road map for any state. If you feel yourself getting lost    go to a Law School near you. It is possible you could get one of the students to guide you or one of the professors. use the Law School Librarian to make the introduction - it works better.

If things get too hot and heavy    you can always file bankruptcy at any time in the process and that would make the suit    and possibly your counterclaim    irrelevant. Makes no difference if you file immediately upon being sued    after you file your answer    in the middle of Discovery proceedings or after Judgement.

The PURPOSE of your Answer and Counterclaim is to drive the legal fees of suing you so high they become agreeable to a settlement.

After you file your Answer    you can expect the other side to either (a) actively pursue the case by filing Motions or (b) ignore the whole thing hoping it will just go away. If the actively pursue it    they are playing YOUR game    since the more work the lawyer does    the more he bills his client. Let them. Since you are pro se    you can go back to the creditor and advise them that their legal bills pursuing this matter will far exceed anything they can hope to recover and maybe they would like to cut their losses and settle.... If b    then they dropped the whole thing    just make sure you show up for Trial. If you don't it's Case Dismissed. If you do    then present your case to the Judge.

Just because they prove to YOU in pre-trial discovery that they have a case doesn't mean an automatic Judgement. They still have to prove it to the Judge and you can file lots of Motions to make them spend lots of money on legal fees before THAT happens.

After service of a summons    FDCPA doesn't really apply. Court rules and procedures tend to overshadow FDCPA.

Can they call you? Yes. But your answer    unless they are talking settlement    is "the matter is in litigation and will be decided in Court".

After an Answer is served    you are DEFINITELY going to trial unless you settle before-hand. That's what the Answer does - says there are issues here that the Judge must decide.

Should you call back? Why not? If they dun you and ask for payment    you already know what to say (see the SECOND paragraph above). If they want to talk settlement    listen to what they have to say.
I am engaged in litigation with Sears right now. Every so often their attorney calls me and suggests settlement. I immediately ask him if he has authority to bind his client to an agreement or is merely the message taker. He gives no reply to that    and says he will check with his client. Meanwhile I have served him with a First Set of Interrogatories (Pre-trial Discovery) that they chose not to answer and have now served them and the Court with a Motion to Preclude them from any testimony or evidence in support of their position at trial. On the supposition that the Court grants my Motion to Preclude    and since their delay has pushed the time frame past the period allowed for Discovery by Court rules (trial is Feb 6th)    I have also filed a Motion for Summary Judgement. Yes    they keep mentioning settlement    but never seem to come up with any offers. I just proceed like nothing has happened. All MY filings are current    timely and proper. Other than a General Denial    they have done nothing. LATE BREAKING NEWS: On January 27    2004 the Judge signed both the Order to Preclude and the Summary Judgement. See... It works. I have asked the Board moderator about posting the Pleadings on the Board so you can use them as a model.

My strategy is simple -make it expensive to sue me. I figure at some point someone in a creditor organization will ask "why are we spending $5000 to collect $500?" Can you imagine the chaos that would be caused if even 10% of debtors followed my advice in this matter? The Courts would become so bogged down that a civil judgement would take a half a lifetime to get    and we all know "justice delayed is justice denied". That's why creditors refuse to negotiate debt so often    they know they can usually get a quick    cheap judgement for the full amount. Change that and we can change the dynamics of being in. At one time I was sued by a company (I don't remember which or for what) and was subjected to a Deposition. A Deposition is their lawyer asking me questions before trial    but with a Court Stenographer taking steno transcripts. The party calling the deposition pays --- by the page. I saw the transcript. It took 4 pages for the attorney to just get my NAME straight. Make long and confusing (and generally irrelevant) answers to drag it out. Remember - the other side is paying the Court Reporter by the page and their attorney by the hour. I do remember one question where in the answer I managed to drag in anecdotes about a dog of mine that had been dead for over ten years. Remember    the Court reporter will take down    and type    in double-space EVERY WORD.

As a general rule    any legitimate information requested in Discovery that is not provided cannot be used in Court at trial. The Discovery process is a way that each party feels out the other's case so that the issues can be narrowed down at trial. Anything that the two parties agree to is "stipulated". All else is resolved at trial. There are no admissions of liability in the Discovery process    just seeing if the other side has a case and how strong that case is.


Suing by a creditor is a decision made with the following thought processes:

A. IF the debtor has assets now    can I get them first    or
B. Is the debtor likely to acquire assets I can attach in the future    or
C. Can I scare the debtor with a summons enough to get the debtor to pay now?

If any of the questions to these questions is yes    and the balance is high enough to warrant a suit (something that varies from creditor to creditor) then a suit will be filed. So    the present condition of unemployment or lack of an attachable bank account is NOT a consideration of the creditor in the decision to sue. It is more the FUTURE prospects of collection. A Judgement greatly extends the Statute of Limitations to collect. In NY the SOL is typically 5 years. A Judgement in NY has a SOL of 20 years and can be renewed for another 20. Meanwhile the interest keeps accumulating.

An INFORMATION SUBPOENA (IS) is a document that a Judgement Creditor can send a debtor that must be answered truthfully at the time it is filled out. So    if you fill out an IS on Monday listing a job at ABC company and quit that job on Tuesday and take a job at DEF Company on Wednesday    you have done nothing illegal. If you answer the IS on Wednesday you would have to list your new job at DEF Company. Same thing with bank accounts. As long as it is the truth on the date you sign the IS    and you change things the next day    you are within your rights. You are under no obligation to inform a creditor (Judgement or Otherwise) of any changes to the IS answers after you have signed and dated the IS. Most states limit the ability of a Judgement Creditor to compel an IS to once a year.

A Cyberspace bank is a bank that will let you do your banking through the internet. It may be an actual brick-and-mortar bank    like US Bank in St Paul    MN (the bank I do my principal banking through) or it may exist only in Cyberspace    like Paypal (which I also use). A Judgement Creditor will look for a bank account in banks hear where you live or work. That is where most people bank. By moving your banking to a Cyber-bank you make that look a lot harder. I live in Tucson. How many bill collectors would know to look for my bank in Minnesota? I maintain a small balance in a Tucson bank that I use just to pull cash out of    but my principal balances (in the thousands) are in Paypal and US Bank.


I just picked up a $1000 check from Sears made out to me at Sears attorney here in Tucson. He admitted to me that my motions drove him crazy and he swears no lay person could have buried him in paper like that. I also saw the bill to Sears - $1200 to defend themselves against a non-PP pull.

Can you imagine how much it would have cost them if SEARS were suing me and I REALLY got them on a paper chase that they couldn't settle their way out of so easily    especially if I have a countersuit?

I think for a CPA, you have done an excellent job on summarizing the strategies, but I have a question.... and perhaps you don't have the answer..  what if the creditor DOES get a judgement against you ?  Are you going to file suit stating that there was no due process and for that reason you could not or did not know to start this wonderful paper trail??? 

I have a situation similar to yours, not as bad, but similar.  I had two credit cards and both had to go into default on due to my accident.   One credit card did get a default judgement because I was never served.  I think I am going to file a suit to the the motion set aside on the grounds that there was no due process....  this card once we DID settle the case, which I had agreed to went back and filed a notice on my credit that the default judgement had been settled... off my lawsuit against a drunk driver.

The other credit card is still going on, and I have a company that is negotiating the liens for me on those.  Capitol One loves to drive their points home.  I had one small business card, and one larger personal cards with them....  I learned about this process when I met this collection agency, NCO...

NCO violates a lot of rules, and this firm in a matter of less than a month, not only has gotten the sum dismissed, but I am getting a check for $500.  It got me thinking...... I need to go after these people and stand for me..... I am great on doing it for others,  I should be able to do it for me.

I also want to comment on your paper trial... YES, I did answer the summons of complaint that Capitol One filed on me,,,,,, noting that due process was not given properly, and my answer.. NOTHING EVER HAPPENED, other than the bill was sold to another couple of creditors, and 4 years after the fact almost, we are still dicking it out..

I am think that if this attorney on the big Capitol One bill sues me, yet again, and maybe the first case was dismissed with prejudice.... that I will use your strategies..  this is not my area of expertise..... so I am just as raw as everyone else!

Thanks for such a great site!

Any recommendations?

You rise some good questions and YES, it does happen often where a creditor gets a Default Judgment without actually following the rules in getting it. Obviously this is a violation of your basic procedural rights and you are within those rights to have the Judgment vacated. Just that happened to me in the last couple of months - I filed a Motion to Vacate Default Judgment and then a Motion to Dismiss the suit. Both were granted by the Judge. The pladings are in the Sample Pleadings Board.

Of course no essay like this can anticipate every situation, and I tried to deal with things the way they are supposed to go. When they go otherwise it is your right and responsibility to speak up and make the appropriate arguments to the Court. Judges don't like their Courts to be abused by attorneys who circumvent procedure or Court Rules and they certainly don't like attorneys who lie to the Court by swearing certain events happened when they in fact did not. The whole premise behind DB is based on this fact - that YOU must be the one to stand up for your rights, because no one else will.

OK, let's assume worst-case scenario here: they sue me (already have) and get a judgment (haven't yet).  And then they call me in for a debtor's examination to find out about my assets.  Wouldn't I have to reveal cyberspace accounts (like Paypal) or out-of-state accounts, on penalty of perjury? 

And the really bad thing is I need my Paypal account to sell on ebay.

What can I do?


--- Quote from: nobk4me on June 18, 2009   09:50:50 PM ---OK, let's assume worst-case scenario here: they sue me (already have) and get a judgment (haven't yet).  And then they call me in for a debtor's examination to find out about my assets.  Wouldn't I have to reveal cyberspace accounts (like Paypal) or out-of-state accounts, on penalty of perjury? 

And the really bad thing is I need my Paypal account to sell on ebay.

What can I do?

--- End quote ---
They can't do a Debtor's Exam without a Judgment.

In a Debtor's Exam you have to reveal all accounts if asked, but you can empy them before they can levy on them.


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