MN Supreme Court amends summons language

May 5, 2010 by Todd Murray · Leave a Comment 

The Minnesota Supreme Court just approved changes to Minnesota’s summons, which go into effect on July 1, 2010. The summons, of course, is the notice that comes with a lawsuit that notifies defendants that they’ve been sued. I’ve been critical of the old summons language because it’s confusing and filled with incomprehensible legalese.

I’m happy to report that the new summons is written in plain, clear English. It has 6 bold-faced notices, each followed by a brief explanation. It very clearly explains that: (1) you’ve been sued; (2) you must reply within 20 days; (3) you must respond to every allegation in the lawsuit; (4) you will lose your case if you don’t respond to each allegation within 20 days; and (5) you should talk to a lawyer if you don’t understand how to help. The new summons is much clearer and should allow consumers to better understand what they need to do to protect their rights.

You can read the new summons in its entirety here.

If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.

What is a summons?

October 26, 2009 by Todd Murray · Leave a Comment 

A summons is a notice that comes with a lawsuit. The purpose of a summons is to notify you of the lawsuit and to let you know how long you have to respond to it. In Minnesota, this is what it says on a summons:

YOU ARE HEREBY SUMMONED and required to serve upon plaintiff’s attorney an Answer to the Complaint which is herewith served upon you within Twenty (20) days after the service of this Summons upon you, exclusive of the day of such service. If you fail to do so, judgment by default will be taken against you for the relief demanded in the Complaint.

That’s about as clear as mud. What it really means is this:

YOU HAVE BEEN SUED. The papers in your hands are a lawsuit. You must answer the lawsuit within 20 days. The day you were served does not count toward the 20 days. If you don’t answer the complaint within 20 days, the other side will win automatically without a judge ever seeing the case.

If it were up to me, the summons would also explain that an answer is a formal document that admits or denies the allegations in the complaint. And that an answer must be in writing and merely calling the plaintiff’s attorney is not an answer. And if you don’t know how to answer a complaint, you should talk to a lawyer right away. Unfortunately, though, I’m not in charge. So this article will have to suffice.

If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.

Why you must answer a debt collection lawsuit

August 27, 2009 by Todd Murray · Leave a Comment 

So you’ve been served with a debt collection lawsuit and don’t know what to do? The first step is to answer the lawsuit in a timely manner. In Minnesota, for example, you must answer the lawsuit within 20 days of being served. Other states may have different deadlines. Check with a consumer lawyer in your area if you are unsure. This post will walk you through the process of answering the lawsuit.

If you don’t answer the lawsuit within the required time, it is likely that a default judgment will be entered against you. In most states, including Minnesota, this means that the court will enter a final judgment against you based on your failure to answer the complaint, not the merits of the debt collector’s case. You will not get a chance to be heard at a hearing and in most cases a judge won’t even review your case.

Even if you believe you owe the debt, you are entitled to answer the lawsuit and force the creditor to prove its case. Remember, the creditor has the burden of proof and must prove that you agreed to be liable for the account and that you owe the precise amount of money they are seeking. This is even more important when the creditor in your case is a debt buyer.

A debt buyer is a business that purchases delinquent accounts from the original creditor and then sues consumers to collect the debts. Because the debt buyer did not originate the debt, it must rely on the original creditor to provide it with evidence to prove its case. In some cases, the original creditor doesn’t provide the debt buyer with any evidence of the debt. And when the original creditor does provide evidence, it often is just a single billing statement that was generated long after the account became delinquent. Even though they often have insufficient evidence to prove their case, debt buyers still sue out thousands of cases every month because they know that most people won’t respond to the lawsuit. Somewhere in the neighborhood of 90% of collection lawsuits proceed by default and result in judgments being entered against consumers without the creditor having to prove its case.  This basic premise is why collecting purchased debt is a thriving sub-industry. Debt buyers know that they can obtain thousands of judgments without having to produce a single piece of evidence.

S0 if you are served with a collection lawsuit, you need to answer it in a timely manner. This will force the creditor to prove its case. Sometimes they can’t, particularly if the creditor is a debt buyer.

If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.

National Arbitration Forum sued by Minnesota Attorney General

July 15, 2009 by Todd Murray · 1 Comment 

The National Arbitration Forum, a private arbitration company that is used extensively by the debt collection industry to circumvent the court process, was sued yesterday by Lori Swanson, the Minnesota Attorney General. The allegations in the lawsuit, if true, will confirm consumer advocates’ worst suspicions about the NAF.

The NAF has long been the bane of consumer advocates because of a suspected bias against consumers. The forum has denied these allegations and repeatedly maintained that it is a neutral decision maker. But the new lawsuit alleges that NAF is financially tied to a New York hedge fund group that owns one of the nation’s largest debt collection operations:

  • “The consumer also does not know—and the Forum hides from the public—that the Forum is financially affiliated with a New York hedge fund group that owns one of the country’s major debt collection enterprises. Beginning in 2006 and through 2007, Accretive, LLC (a family of New York hedge funds under the control of an investment manager named J. Michael Cline and his associates), engineered two transactions. In the first transaction, Accretive formed several private equity funds under the name “Agora” (meaning “Forum” in Greek), which in turn invested $42 million in the National Arbitration Forum and obtained governance rights in it. In the second transaction, three of the country’s largest debt collection law firms (Mann Bracken of Georgia, Wolpoff & Abramson of the District of Columbia, and Eskanos & Adler of California) merged into one large national law firm called Mann Bracken, LLP. Accretive then formed and funded (partly using federal money from the U.S. Small Business Administration) a debt collection agency called Axiant, LLC, which acquired the assets and collections operations of Mann Bracken.”
  • “Through these transactions, the Accretive hedge fund group simultaneously took control of one of the country’s largest debt collectors and became affiliated with the Forum, the country’s largest debt collection arbitration company. In 2006, the Forum processed 214,000 consumer debt collection arbitration claims, of which 125,000—or nearly 60 percent—were filed by the law firms listed above. The Forum conceals its affiliations with the collections industry through extensive affirmative representations, material omissions, and layers of complex and opaque corporate structuring.”

The lawsuit goes into great detail about the murky corporate web that has been created to hide this obvious conflict of interest from the public. The lawsuit further alleges that NAF, through a secret marketing campaign, encourages debt collectors to use arbitration to collect debts. One such marketing campaign, revealed in the lawsuit, lists the following benefits for debt collectors using NAF:

  • “[t]he customer does not know what to expect from Arbitration and is more willing to pay;”
  • “[t]hey [customers] ask you to explain what Arbitration is then basically hand you the money;” and
  • “You have all the leverage and the customer really has little choice but to take care of this account.”

The lawsuit further alleges the NAF encourages debt collectors to include mandatory binding arbitration clauses in their contracts, and in some cases, provides sample arbitration clauses to certain debt collectors. There are also allegations about the creation of “talking points” to deflect questions about the NAF’s financial ties to the debt collection industry and allegations of the forum giving deliberately misleading answers to a reporter that questioned the forum’s ties with the hedge fund.

You can read the full text of the lawsuit here. It’s long, but well worth the read if you’re interested in the gory details.

7/20/09 update: That didn’t take long. The Star-Tribune reports that Lori Swanson and the NAF have agreed to settle the lawsuit. And its a big win for Swanson. The NAF agreed to stop accepting any new consumer arbitration or taking part in processing or administrating any new consumer arbitration nationwide. The company must stop administering arbitration involving consumer debt including credit cards, consumer loans, utilities, telecommunications, health care and consumer leases. The forum will be allowed to continue to arbitrate internet domain name disputes and other business to business matters. The settlement takes effect on July 24, 2009. Under the terms of the NAF, the forum did not concede any liability for the accusations in Swanson’s lawsuit. My take on the situation: good riddance, NAF.

Advice for dealing with debt collectors

April 3, 2009 by Todd Murray · Leave a Comment 

putdebtinbinsDon’t tell a debt collector where you bank or work.

This information is very valuable to a debt collector because bank and wage garnishments are easy and cheap ways to collect debts. Never voluntarily give this information to a debt collector. A favorite trick debt collectors will use to get you to tell them this information is to say “I already know you bank at ABC Bank.” Surprisingly, many people will reply “No I don’t. I bank at XYZ Bank.” Don’t fall for this trick.

Keep accurate records of all communications with debt collectors.

If you talk to a debt collector on the phone, immediately after hanging up, write down everything that was said during the conversation in as much detail as possible. Sign and date these notes. If a debt collector violates the FDCPA, your notes can be used as evidence of the violation. Similarly, be sure to keep every letter sent to you by a debt collector, including its envelope.

Demand that the debt collector confirm any agreement in writing.

If you agree to a payment plan or settlement with a debt collector, before sending any money, demand that the debt collector confirm your agreement in writing. It’s not unheard of for debt collectors to try to back out of payment agreements. Also, if a debt collector gives you an extension of time to make a payment or to respond to something, make sure they confirm that agreement in writing.

Avoid long, open-ended payment plans.

Debt collectors will usually agree to monthly payment arrangements on the full balance, plus accrued interest. If possible, avoid this type of payment plan. With the high interest charged by most credit card companies, you will be paying the debt back forever. If possible, negotiate a fixed amount and term. This way you know exactly how much you’ll be paying and for how long.

If you are sued, talk to a consumer lawyer immediately.

A debt collection lawsuit is serious business. Unless you are well-versed in the rules of civil procedure and have a good understanding of the deadlines involved in litigation, you should strongly consider getting advice from a consumer lawyer. I’ve seen many cases where consumers chose to represent themselves, had strong defenses, but ultimately lost because they failed to follow a court rule or meet a deadline.

(photo: Daveybot)