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    Understanding Debt Collection Lawsuits

    When credit card balances, personal loans, or medical bills go unpaid, the accounts will typically go into collection, which if unresolved can lead to a lawsuit to collect the unpaid debt. Too often, consumers do not oppose or answer debt collection lawsuits which enables creditors to obtain default judgments against them. Once obtained, a judgment can be used to garnish wages, freeze a bank account, and place a lien against property, such as a house, condo or coop. It is crucial to respond to a summons and complaint in a timely manner because there is only a short time frame to do so allowed by law. In New York, if you were personally served with the summons and complaint, you only have 20 days to respond. If you were served by mail or another method, you only have 30 days to respond. The plaintiff’s attorney may agree to an extension of time for the defendant to answer a complaint but will often request a waiver of personal jurisdiction in exchange. When faced with a collection lawsuit, a debtor should promptly consult with an attorney to find out his or her legal options. There may be a strong legal basis to oppose a collection lawsuit. Some common defenses may include:

    Expired statute of limitations

    If a plaintiff waits too long to file their lawsuit, they may be beyond the applicable statute of limitations. In New York, this period is six years from the last payment made by the consumer. A lawsuit filed after the statute of limitations has expired is time barred and violates the Fair Debt Collection Practices Act (FDCPA) for consumer debts.

    Lack of standing

    In this scenario, the plaintiff cannot actually prove that they own the subject debt and lack the documentation that it has the right to sue. This often occurs when a debt buyer has purchased a defaulted loan portfolio in bulk. Some common debt buyers include: Cach LLC, Cavalry Portfolio, Encore Capital Group, Midland Funding, Portfolio Recovery Group, LR Credit, LVNV Funding, and Rushmore Recoveries.

    Failure to credit payment

    The creditor fails to properly credit the consumer’s account for payments made and may be seeking to collect more than the consumer owes.

    Improper service

    The plaintiff failed to properly serve the consumer with the summons and complaint. If you never received notice of the case, you may have a defense based on lack of proper service or lack of personal jurisdiction. Some plaintiffs have been known to use process servers with questionable ethics. They claim that they served a defendant when, in fact, they did not. This is sometimes called “sewer service.” As a result, a defendant can end up with an almost automatic default judgment against them. In this scenario, a defendant can make an application with the court to vacate the judgment and challenge the collection lawsuit. It should be noted that recent New York court rules will make it more difficult for creditors to obtain default judgments on this basis and will require that creditors show more diligence with their service of process.

    Suing the wrong person

    The plaintiff sues the wrong person for the outstanding debt. This can especially be a problem when you have a common name.

    Fight the lawsuit in Court

    We will identify defenses for your case and, in some cases, claims you can bring against the debt collectors. In some circumstances, we may seek to have the case dismissed or withdrawn. In other cases, a defendant may need to fight the suit in Court to bring a more recalcitrant plaintiff to the table in order to negotiate a settlement.

    If you have unpaid debts, credit card debt, medical bills, car loan deficiencies, etc., you may at some point be sued by a law firm, such as Forster & Garbus, Rubin & Rothman, Stephen Einstein & Associates, or Zwicker and Associates, among others. If you find yourself sued for a debt, you should consult with an attorney immediately. Do not ignore a summons and complaint. If the plaintiff obtains a judgment against you, your wages may be garnished or your bank account frozen or restrained. If you own real estate, a lien may be placed on your property for the judgment amount. If you already have a default judgment filed against you but were not served properly, you may be able to vacate the judgement by filing a motion in Court.

    The debt collectors have attorneys working for them, shouldn’t you have an attorney on your side? For over 25 years, the Law Offices of David I. Pankin has been helping consumers facing debt collection lawsuits. One typically has three options when faced with a debt collection lawsuit or lawsuits.

    Fight the lawsuit in Court

    We will identify defenses for your case and, in some cases, claims you can bring against the debt collectors. In some circumstances, we may seek to have the case dismissed or withdrawn. In other cases, a defendant may need to fight the suit in Court to bring a more recalcitrant plaintiff to the table in order to negotiate a settlement.

    Bankruptcy

    We can also explore bankruptcy options to help you obtain a fresh financial start and eliminate the debt. In a Chapter 7 bankruptcy proceeding, debt can be quickly eliminated, while in a Chapter 13 bankruptcy case, debt is reorganized into a payment plan that is administered through the Bankruptcy Court. When a bankruptcy petition is filed, any debt collection lawsuit brought against you will be immediately stayed. You can find out more about bankruptcy on our Bankruptcy Information Page

    The Law Offices of David I. Pankin, P.C. has over 25 years of experience in helping New Yorkers fight debt collection lawsuits brought by creditors and debt collectors. The sooner you get help in defending a lawsuit filed against you, the better chance you will have in protecting your rights. To schedule a free initial consultation, contact the Law Offices of David I. Pankin, P.C. today at 888-529-9600 or by using our easy online contact form.