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5 Tips for Defending Debt Collection Lawsuits as the Courts Reopen

By: Robert J. Nahoum

THE PROBLEM:

Since the beginning of the Corona-Economy, courts throughout New York state and all over the country have shutdown.  In many ways debt collection, like so many other sectors of the economy, came to halt.  The debt collectors did not stop trying to collect debts because the debts miraculously disappeared, they stopped because our world stopped.  Now as things begin to reopen, there is pent up demand – a backlog of debt collection cases waiting to be filed.  Soon, the dam will break, and a flood of new debt collection cases will be filed in courts all across the state. Worse, with so many people out of work, unable to pay their bills and consumer debts mounting, we are on the precipice of record levels of debt and debt collection lawsuits.

Set against this backdrop, there are a few things consumers can do to protect themselves in the face of a debt collection lawsuits. Here are 5 Tips for defending debt collection cases as the courts reopen:

TIP 1 – Don’t Ignore the Debt Collectors:

A common strategy for dealing with debt collectors is to ignore them. Bury your head in the sand. If you don’t answer the phone calls and if you tear up the letters, eventually the debt collectors will just go away – not true.  This is the opposite of what you should do!

Debt collection is an escalating process.  The life of a defaulted consumer debt follows a path which starts with the internal debt collection department of the creditor and often ends in a court ordered judgment, garnisheed wages and restrained assets.

There are a number of reasons why ignoring communications from a debt collector is a bad idea.  The most consequential of these is when those communications relate to a debt collection lawsuit.  If your strategy for dealing with debt collectors is to tear up debt collection communications, you may end up missing court documents.  If you fail to answer a debt collection summons, the debt collector will be awarded a default judgment.  With a default judgment in place, the debt collector can garnishee your wages, freeze your bank account and even levy on your property.

Don’t give the debt collector an easy win. Talk to them early and often. If you can’t afford to pay them, tell them that. If you dispute the debt, explain why and put it in writing. Silence will cause the debt collector to escalate not to go away.

TIP 2 – Hire a Lawyer:

100% of the time, the debt collector has a lawyer.  100% of the time you will be at a disadvantage if you do not also have a lawyer.  However, these facts alone are not necessarily enough to make hiring a lawyer the right thing for you to do.  The economics must make sense. 

For the most part, lawyers are not free.  If it cost you more to hire a lawyer than to just pay the debt, hiring the lawyer may not make sense. 

Because debt collection lawsuits usually involve relatively smaller amounts of money, say a few thousand dollars, most debt defense lawyers (me included) charge based on a flat fees are a good way to avoid legal bill sticker shock.  Flat fee arrangements have become a popular and reasonable billing arrangement in debt collection cases.

TIP 3 – Answer the Lawsuit:

If you can’t afford a lawyer or if the economics do not make hiring a lawyer economically feasible, you must still answer the lawsuit.  If you fail to answer the lawsuit a default judgment will be awarded entered against you.

Answering a lawsuit on your own behalf, without a lawyer has one of those fancy Latin terms – “Pro Se”.  The literal translation of “pro se” is “for oneself” or “on behalf of themselves”.  Pro Se answers are generally not as good as attorney prepared answers.  However, they are far better than not answering the lawsuit at all.

I have previously given detailed guidance on how to answer a debt collection lawsuit (it is my most viewed blog post!): https://nahoumlaw.com/how-to-answer-a-summons-and-complaint-in-a-debt-collection-lawsuit/

The courts also provide pro se forms to consumers to fill-out themselves.  I have found these forms to be inadequate to effectively protect a consumers’ rights.  Again, they are better than nothing.

TIP 4 – Limited Scope Engagements and Unbundled Legal Services:

If hiring a lawyer is not economically feasible, there is an alternative to relying on pro se court forms – Limited Scope Engagements and Unbundled Legal Services.  Rather than representing you throughout your case, an attorney can help you represent yourself.  You pay the attorney for the portions of your case that he or she helps you with.  Some of the services that may be offered by an attorney offering limited legal services are:

  • Advise you of the appropriate legal action(s) to take in your circumstances;
  • Advise you of the forms appropriate for your case;
  • Preparation of pleadings and other legal documents;
  • Review documents prepared by you;
  • Explain the meaning of legal documents/language;
  • Advise you how to conduct yourself in Court;
  • Advise you on filing and serving documents or scheduling hearings;
  • Advise you of your rights and responsibilities.

Limited scope engagements are different from the usual attorney/client agreements for several reasons.  First, unlike the usual agreement, limited scope engagements are for limited legal services, rather than for the complete array of services that lawyers often provide to their clients in the pre-litigation and litigation phases of a lawsuit.  Second, in limited scope engagements the client has agreed to do a number of different things than under the usual attorney/client agreement.  Third, the total fee paid to the attorneys will be far less than the attorneys’ normal full-service attorney’s fee, because the scope of the legal services that the attorneys have agreed to provide to the client is limited.

Under limited scope engagements the client is responsible for most, if not all, activities relating to his or her case.  Some, but not necessarily all of these activities may include obtaining and completing the correct forms, filing completed forms with the Court, following case schedules, having papers served and appearing and arguing the case in a Court.

TIP 5 – Settle Your Case:

Sometimes, the most economical and efficient path is to come to a mutually agreeable settlement with the debt collector.  For the most part, all debt collectors are willing to settle debt collection lawsuits. Whether or not the settlement is a good deal for you, depends on a variety of factors.

There are important practical considerations to make in determining whether and for how much to settle a debt collection lawsuit.  Firstly, you should never sign up for a settlement that you can’t keep to.  Next, you need to do a cost/benefit analysis.  While sometimes you have to draw a line in the sand and put up a fight, other times you have to be practical about the costs associated with defending a debt collection case.  For example, if you’ve been sued for a $1,200.00 credit card debt and would need to take two or three days off from to go to court and fight, it might in the end cost you more to fight then to settle.

WHAT YOU SHOULD DO:

Being sued in a debt collection case requires you to be an advocate for yourself.  That advocacy may lead you to hiring a lawyer, purchasing unbundled legal services or proceeding pro se.  Whichever path is best for you, you cannot bury your head in the sand and pretend it is not happening.  Ignoring the lawsuit will not make it go away – it will only make it worse.  Don’t hand the debt collector an undeserved victory.

If you need help settling or defending a debt collection lawsuit, stopping harassing debt collectors or suing a debt collector, contact us today to see what we can do for you.  With office located in Brooklyn and the Hudson Valley, the Law Offices of Robert J. Nahoum defends consumers in debt collection cases throughout the Tristate area including New Jersey.

The Law Offices of Robert J. Nahoum, P.C
(845) 232-0202
www.nahoumlaw.com
info@nahoumlaw.com

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