Being Served A Lawsuit Or Harassed By Creditors?

PodCast On Debt Collection & Being Served A Lawsuit Notice

Consumer protection debt relief attorney John Mastriani joined Gary Knight on Ask the Experts in May. The conversation covered a range of topics regarding debt collection and what options the defendant has when they are served notice of a lawsuit. Given the amount of debt that U.S. citizens find themselves in, this is important information. When sued, the only reliably effective defensive option is to consult with a consumer protection attorney like Mastriani.

Why not just go with a national debt relief firm?

There are critical differences between a debt relief business and a debt defense attorney. There are numerous businesses touting their ability to settle and reduce debt on behalf of their clients, but they often put their clients at a severe disadvantage.

A national debt relief firm will think nationally, but debt defense is best executed at the state, or even county level. For instance, Texas is a homestead state, which means it is tough for collectors to foreclose on the defendant’s home, even if they have a judgment. It’s easier with a judgment, but not easy in general. A national debt relief firm may have no knowledge of this and will not use it to the client’s advantage when seeking settlement. This issue is further exacerbated by the fact that debt relief firms often have no legal expertise to begin with. They may not have the ability to detect which laws are relevant regarding a collector, making it tough to get that collector to bend. Debt defense attorneys have noticed that most national firms will settle for the same percentage, no matter where their client lives.

Further, debt relief firms require their clients to hand money over so they can pay collectors as they see fit. Most people don’t like others acting like their money manager, and there’s nothing keeping the relief firm from just going silent and leaving with the client’s money. It happens more often than you think, and is an ongoing concern for consumer protection experts, as these firms were, at one time, an effective means of combating aggressive collectors. That is increasingly not the case now.

What if I haven’t actually been served with lawsuit papers?

In 2007, the jurisdictional limits were extended for Texas JP Courts. In other words, collectors could sue for more than they could before, and this inspired a lot of bad behavior on the part of the process servers. This was noted in the years following the limit change, with an unusual number of people claiming that they were never served, and were willing to sign an affidavit attesting to that fact.

As it turns out, it’s common for process servers to claim to have provided the defendant with the lawsuit papers, without ever having done so. This can lead to an improper judgment rendered against the defendant, as they have no idea of the lawsuit’s existence. Unfortunately, there is little recourse when a process server does do this, so it remains a frequent issue. However, a debt defense attorney can use this fact to overturn a judgment and defend against the lawsuit.

Can I go to jail for outstanding debt?

Going to jail for outstanding debt is something that very rarely happens. It’s not something to generally worry about, and even if it is a possibility, there is a procedure that leads up to it, so a debtor will never be taken to jail for a debt without their knowing about it beforehand.

That won’t stop a collector from threatening a debtor with jail, though, and these threats happen with regularity. This is another reason to consider a debt defense attorney because bizarre threats like that won’t work on an attorney, and might even be used against the collector to demonstrate violations of fair debt collection practices.

How can a debt defense attorney help with student loan debt?

Student loan debt is a problem for U.S. citizens, some of whom attended schools that disintegrated before they had a chance to graduate or get a job. This a major hole in regards to consumer protection that will need to be addressed soon.

However, in the present, student loans can be sued on, though the vast majority of student loan lawsuits are executed by third party debt buyers. These debt buyers are frequently willing to get rough with debtors, but they tend to avoid debt defense attorneys.

Debt buyers rarely have all the paperwork they need to have the legal authority to sue. When debt buyers purchase accounts, the original debt holder isn’t going to do any work for them in seeking deposition or tracking down all of the paperwork associated with the accounts. The debt buyer agrees to this because they can buy the debt for next to nothing, and because they know that more than 90 percent of people they sue won’t push back. Those people are accepting a judgment against them that might have been avoided entirely if they had fought back.

If I can’t pay my collectors, how can I pay an attorney?

The idea that an attorney is unaffordable is false thinking when it comes to debt defense. For one, a debt defense attorney can typically reduce outstanding debts through effective settlement negotiations, to the point where the cost of the attorney is more than made up for with their legal expertise.

Also, without attorney assistance, the likelihood of getting hit with a judgment is extremely high, and this is something that will cost the debtor for years. It may not seem like a big deal day to day, but major life events, like selling a house or the death of a spouse will often bring this judgment to the forefront, costing the debtor dearly. For this reason, it’s far more expensive to live with a judgment than it is to hire an attorney who can help their client avoid them in the first place.

Why don’t I just file for bankruptcy?

Bankruptcy is not always a magic bullet in eliminating debt. In some cases, it can be effective, but some people are not good candidates for bankruptcy. Certain jobs, like financial or insurance jobs, are harder to attain by people who have filed for bankruptcy.

If bankruptcy seems like the right option, and a favorable settlement would be difficult to attain, then a debt defense attorney may recommend it. But if someone doesn’t quality for Chapter 7 bankruptcy, they must file for Chapter 13 instead, and through Chapter 13, it can take years for outstanding debts to be eliminated. In the meantime, the debtor will be expected to pay on the debt and try to make ends meet while under financial duress. This is why a debt defense attorney will always seek settlement first.

What if a collector has violated fair debt collection practices?

There are numerous fair debt collection regulations that collectors must follow when communicating with the debtor or their attorney. These include things like only calling during certain times and not making deceitful statements when attempting to collect on the debt.

It goes without saying that debt collectors frequently violate these regulations, assuming they will get away with it. They often do, but when a debt defense attorney is involved, they won’t. In fact, if their behavior is particularly egregious, the attorney will recommend their client sue back, possibly winning a judgment of their own. But even if the behavior is just run of the mill ugly, the debt defense attorney can use it to get the lawsuit dismissed or to position their client better for settlement negotiation purposes.

Can my wages be garnished by a collector?

Though there are some funds that are exempt from garnishment, like social security, a collector that does have a judgment can move to garnish a bank account. As soon as the defendant’s paycheck is deposited in the account, it is vulnerable to garnishment.

Again, Texas makes this tougher than most other states to execute, but it does happen. It’s just another reason why it’s so important to avoid a judgment from the outset.

Judgement? What’s a judgment?

A judgment acts like a lien against your assets, and it’s one that is often executed at the worst possible time. With a judgment, that homestead is no longer truly yours, and in some cases, can be used as an asset for the collector to sell.

Judgments are rendered in most lawsuits, but many of them are avoidable on the consumer side, if only the consumer would properly defend themselves. Unfortunately, this is a tactic that collectors use on consumers before they have a chance to fight back, as judgments are complex, technical legal matters. They have to be examined to determine what they allow and cover, and this is something only an attorney can do accurately.

Debt collectors are as successful as they are because they don’t expect their targets to push back. They certainly don’t expect many to hire an attorney for legal representation, and they definitely don’t want to deal with a debt defense attorney. That’s because, in most cases, they won’t win.