An overview of a typical debt collection lawsuit in Minnesota (and some tips for how to deal with it).
Dealing with a debt collection lawsuit can be a scary and confusing process, particularly in Minnesota where the initial stages of the case often take place outside of court oversight. My hope is that this post can shed a little bit of light on the debt collection litigation process and allow you to make a more informed decision about how to get your case resolved as quickly and painlessly as possible.
Before we begin…
First, reading things on the internet is not a substitute for consulting with or hiring an attorney. A blog post must necessarily be generic, but your case involves specific facts and circumstances that require specific legal advice. Don’t rely on this, or any post, on the internet when faced with a collection lawsuit. It’s best to consult with an attorney with experience defending debt collection lawsuits in your state at the very beginning of your case. I know this advice sounds self-serving, but I’ve been handling debt collection lawsuits for over 7 years–3 years on the creditor side, 4 plus years on the consumer side–and it’s extremely, extremely rare for a consumer to win in court without hiring an attorney. I know that money is a concern, but many consumer attorneys offer flexible payment options to make it affordable for consumers to get help for a debt collection lawsuit.
Second, this post describes the basic steps of a collection lawsuit in District Court in Minnesota. Every state has different laws and procedures and what happens in a Minnesota lawsuit may be very different from what happens in a collection lawsuit in another state. If your collection lawsuit is not in Minnesota, then this post will not help you at all and you shouldn’t rely on anything I’ve written here. And if your case is in Minnesota Conciliation Court, or small claims court, then the steps are different than what I’ve described here.
Step 1 — Service of the Complaint
In Minnesota, a debt collection lawsuit begins when the consumer is served with a copy of the Summons and Complaint. The Summons is a notice that a lawsuit has started and contains basic instructions about what to do next. The Complaint details who the parties are and what claims are being made. The Summons and Complaint are not required to be filed with a court and most debt collection lawsuits will not be filed with the court at the time they are served. Accordingly, the Summons and Complaint will not have a court file number on them. There is a lot of information on the internet that suggests that a Complaint without a file number is not valid. This may be true in other states, but it isn’t true in Minnesota.
I’m often asked what it means to be “served.” Served essentially means “notified.” In Minnesota, the most common way to serve a defendant with a Summons and Complaint is to personally hand it to the defendant. Another common method of service is to hand the Summons and Complaint to a person of “suitable age and discretion” that lives with the defendant. This is usually a spouse, older child, or roommate. In Minnesota, it’s possible to serve a Summons and Complaint by mail, but the defendant must sign an acknowledgment that they’ve received the complaint or it’s not effective service. It’s also possible to serve a defendant by publishing notice of the lawsuit in a newspaper or similar publication, but this is very rare in collection cases.
Step 2 — Answer the Complaint
Once a lawsuit is served, the defendant has 20 days from the day he was served to respond with an Answer. An Answer is a formal, written, legal document that specifically responds to each of the allegations in the Complaint and lists any defenses that the defendant has. Phone calls or letters are not considered Answers under the court rules.
If the defendant does not answer a lawsuit within 2o days of being served, then he is in default and a judgment may be entered against him. In a debt collection case, a default judgment is a final court order that the consumer owes the money. A default judgment is granted not because the creditor has better evidence or arguments, but because the consumer didn’t participate. It happens administratively and no judge will ever see the case. If you want to protect your rights and force the creditor to prove its case in front of a judge, then you must answer the lawsuit within 20 days of being served.
Step 3 — Discovery
Assuming that the consumer answers the Complaint properly, the next step in a debt collection lawsuit is discovery. If the case has not been filed with the court, there is no explicit time frame for discovery to happen and the parties are free to serve discovery whenever they wish. Once the case is filed with the court, the court will issue a deadline for discovery to be completed by.
Discovery is simply an opportunity for the parties to exchange information about the claims and defenses involved in a case. Discovery is not compulsory and a party is only required to provide information if they’re properly asked. The most common forms of discovery in a debt collection case are Interrogatories, Request for Production of Documents, and Requests for Admission. Interrogatories are basically just questions that one party asks of the other. Requests for Production of Documents, as the name implies, requires that certain documents related to the case be produced. And Requests for Admission are essentially true or false questions about the claims or defenses in the case.
To request discovery, a party has to properly serve their Interrogatories, Requests for Production of Documents, or Requests for Admission. Written discovery is usually served by mailing the requests to the other side. The other party then has 30 days from the day the discovery was served to respond fully. Simply mailing a letter to the other side asking them to provide information about the case is not sufficient and doesn’t trigger the other side’s duty to respond.
Requests for Admission are probably the most critical part of discovery, because if they are not responded to within 30 days, they are considered admitted. Creditors write their Requests for Admission carefully so that if the consumer doesn’t respond to them, they will end up admitting each element of the creditor’s claims. I’ve seen cases where the only evidence that the creditor put in front of the judge was the consumer’s failure to respond to the Requests for Admission.
The bottom line: if you receive discovery requests, you must truthfully respond to them in writing within 30 days. If you don’t, you risk losing your case on a technicality and being penalized by the court. And if you want to ask questions of the other side and see what documents they have, you must mail them proper discovery requests. If they don’t respond within 30 days, you can ask a court to make them respond and penalize them if they don’t.
Step 4 — Summary Judgment Motion
The next step in the majority of collection cases is the creditor’s summary judgment motion. This is a hearing in front of a judge where the creditor will offer all of its evidence and legal arguments and ask the judge to give them a judgment. Defending a summary judgment motion is a complicated and involved process, but essentially it requires the consumer to file a brief with his legal arguments, any written testimony that he wishes the court to consider, and any documents that he wants the court to review. There is a hearing where the judge will have an opportunity to ask questions of both sides. The judge then considers all of the arguments and evidence and decides whether the creditor is entitled to a judgment. If the judge rules in favor of the creditor, a judgment is entered and the case is over. If the judge rules against the creditor, then the case will proceed to trial.
Defending against a creditor’s summary judgment motion is probably the most difficult thing for a consumer to do himself. There are a myriad of rules, procedures, and deadlines that must be strictly followed. Many summary judgment motions are won by the creditor on a technicality rather than on the merits. For this reason, a consumer faced with a summary judgment motion should strongly consider hiring an attorney. If you want to hire an attorney to help you at this point, you should hire one immediately after getting notice of the creditor’s summary judgment motion. There are strict deadlines to file your response and an attorney will need as much time as possible to get up to speed. Don’t wait until the week before the hearing to call an attorney.
Step 5 — Pre-Trial and Trial
If you’re fortunate enough to defeat the creditor’s summary judgment motion, the case will proceed to trial. The judge will issue detailed instructions about the time leading up to trial. There are so many variables at this point that it’s difficult to describe all the potential scenarios. If you get to this point, you would benefit greatly from discussing your case with an attorney. You have a great deal of leverage to get the case resolved if you defeat the summary judgment motion and an experienced consumer attorney can help you maximize that leverage to get the best possible outcome.
A word about settlement
At any point in the process described above, the parties may agree to settle the case. Usually, this means that the consumer will pay an agreed-upon amount of money and, in exchange, the creditor will dismiss the lawsuit. The amount of money that the creditor will agree to settle for depends on many factors, but generally speaking, the better your legal defenses, the better deal you can get. An experienced consumer attorney will be able to advise you about what a reasonable settlement is in your case.
Virtually any attempt to collect a debt that isn’t owed violates the FDCPA. The Fair Debt Collection Practices Act is a federal law the regulates what debt collectors can and can’t do when collecting a debt. Broadly speaking, the FDCPA prohibits a debt collector from saying anything false or doing anything that is unfair. Whether you’ve already paid the debt off, or didn’t owe the debt in the first place, nearly every attempt to collect a debt that isn’t rightfully owed will involve either a false statement, unfair collection conduct, or both.
You can sue a collector who talks to third parties about your debt. There are five main benefits to suing a debt collector that has violated your rights under the FDCPA:
1. Up to $1,000 in statutory damages. If you bring a successful FDCPA case, the court will award you up to $1,000 in statutory damages. These damages are provided by law as a penalty against a debt collector that violated the FDCPA and you don’t have to prove that you suffered any actual harm to be awarded statutory damages.
2. Provable actual damages. If a debt collector’s abuse has caused you to cry or lose sleep or if the collector’s harassment has affected your relationship with your loved ones or your performance at work, you may be able to recover actual damages. Not every consumer will suffer actual damages due to a collector’s conduct, but if you can successfully prove that you’ve suffered tangible harm, you’re entitled to compensation for that suffering.
3. A free attorney. If you win your case, the collector has to pay your attorney fees. Because of this, most consumer attorneys take FDCPA cases on a full contingency fee, which means that you don’t have to give your lawyer any money up front. Your attorney gets paid by the debt collector or gets a percentage of any out-of-court settlement.
4. Your litigation costs are covered. The costs for filing fees, service fees, deposition transcripts, etc. can quickly add up. But if you win your FDCPA case, the debt collector has to pay all of your court costs.
5. Hold the debt collector accountable. Debt collectors love to lecture consumers about taking “personal responsibility” for paying their bills. An FDCPA lawsuit is a chance to turn this argument right back around at the debt collector and force them to take responsibility for their illegal debt collection tactics.
If a collector violates the FDCPA, it’s time to talk to an attorney.If you live in Minnesota and would like to discuss whether a debt collector has violated the FDCPA and what you can do about it, please use the form in the upper right of this page to fill out my online case evaluation form or call me directly at 612-284-4141. If you live in another state, click here to find a consumer attorney in your area.
Last week, a New Mexico jury awarded a consumer $1.26 million in a FDCPA suit in New Mexico. The jury awarded $161,000 in actual damages and whopping $1.1 million in punitive damages.
The case involved repeated attempts–including two wage garnishments–to collect a debt from a person that did not owe it. Although the plaintiff in the case had the same name as the actual debtor, she persistently told the debt collector that the debt did not belong to her. Even her employer got involved: when the debt collector served the garnishment papers, the employer told the debt collector that they were attempting to garnish the wrong person. And it turns out that they were. During the proceedings, it was revealed that the original creditor had provided the debt collector with the contact information for the correct debtor, but that the debt collector manually changed the contact information to that of the similarly-named non-debtor. And although the debt collector asserted that the mistake was a result of a bona fide error–which is a defense to a FDCPA claim–apparently, the jury did not buy their argument. And probably for a good reason. In my opinion, it’s difficult to argue bona fide error when you originally had the correct contact information, altered it to pursue the wrong person, and ignored that person’s (and her employer’s) repeated warnings that the collector had the wrong person.
Jury Awards Plaintiff $1.26 million in FDCPA Violation Lawsuit | InsideARM | July 31, 2011
If you’re dealing with debt collectors, make sure to download and use my free debt collection call log so that you can document all of the debt collectors’ communications. And if a debt collector does anything that you think was unfair; untrue; or harassing or abusive, please contact me to discuss the situation further. I offer a free case review for all FDCPA cases and if I agree to handle your case, you won’t have to pay me any money up front. My fees come from the money I recover from you if you win your case or accept a negotiated settlement.
Last December, I posted about a Florida woman who sued a debt collector for contacting her family on Facebook. It turns out that the judge agreed with her and ruled last month that the debt collector could no longer contact her–or her family and friends–on Facebook or any other social-networking site. Click below for all of the details.
Debt collectors must tread lightly on social media | Orlando Sentinel | April 17, 2011 (via Consumerist)
The garnishment of joint bank accounts in Minnesota has generated considerable controversy–and litigation–over the last few years. Here’s what you need to know if your joint bank account has been garnished by a debt collector:
In the 2007 case of Enright v. Lehman, the Minnesota Supreme Court ruled that a creditor can only garnish money from a joint bank account that belongs to the judgment debtor. So, for example, imagine that two people, let’s call them Rocco and Ani, have a joint bank account. Rocco has a judgment against him and a debt collector garnishes the joint account. Under the Court’s ruling, the debt collector could only garnish money from the account that belonged to Rocco. The debt collector wouldn’t be able to garnish any money in the account that belonged to Ani.
Unfortunately, the Enright decision left a number of questions unanswered. First, and most importantly, could a debt collector ever garnish a joint account when not all the account holders were judgment debtors? And if so, who was responsible for establishing what money in the account belonged to the judgment debtor–the creditor or the debtor? In a 2010 decision, the Minnesota Supreme Court answered these questions, and the answers weren’t favorable to Minnesota consumers. The Court ruled that a creditor could garnish a joint account, but could only keep the money that belonged to the judgment debtor. The Court also ruled that all of the money in a joint account was presumed to belong to the judgment debtor unless he and the joint account holders showed otherwise.
But what about the non-judgment debtor account holder? Is it really fair to her to have her money frozen while the garnishment process plays out and the ownership of the money in the joint account is established? Most of you have heard of the concept of “due process”. What that generally means is that before the government can deprive a person of rights or property, the person has to be given notice and an opportunity to be heard on the issue. But when a debt collector garnishes a joint bank account, the non-judgment debtor account holder doesn’t get any notice about the garnishment. Only the judgment debtor gets such a notice, and the notice doesn’t come until after the money has been frozen. And although Minnesota law allows non-judgment debtor account holders to be involved in the Court process, the debt collector isn’t required to notify the non-judgment debtor of her right to do so. So is depriving the non-judgment debtor account holder of her money without any notice or opportunity to be heard a violation of her Consitutional right to due process? That’s the issue that will be before the Federal District Court of Minnesota this spring.
If the Court agrees that the current garnishment process violates the Constitution, it could have far-reaching implications on how debt collectors can collect money. Stay tuned.
If you still have questions about garnishment, feel free to download my free guide How to Survive Garnishment. It’s packed with information and tips for handling garnishment and will answer most of your questions about the garnishment process. If the guide doesn’t answer all of your questions, I offer paid consultations for a small fee. Please click the button in the upper right corner of this page and fill out my free online case evaluation form to learn more.