Consumer Collections: Delays Can Spoil a Good Defense and Many Offenses

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Many people suffer unnecessarily for years with incredible loads of debt, which can be enforced and collected by a court judgment. Not only should people not bear such a burden for many years, but long delays by the consumer can limit helpful options. This posting will explain what delays are a problem, the length of the delays, and procedures to get around a delay.

In state courts around the country, debt collection agencies, banks, and credit unions have filed many hundreds of thousands of debt collection lawsuits. These large creditors continue to file collection cases at a rate that is amazingly high, by historic standards.  Not long ago, the dockets of state courts had a mix of local civil disputes and debt collection cases.  Now, almost all state court dockets are clogged with debt collection cases.

Many debt collection agencies are enormous companies, some listed on a stock exchange. These companies buy credit card and other debts from banks and other lenders. After filing a collection case in a court, the lawsuit papers must be hand delivered to the defendants named in the case. This is known as personal service of process. The “Due Process Clause” of the United States Constitution requires certain written notice of a lawsuit to ensure the defendants have the chance to file a written response (often known as the answer to complaint) in court, before a judgment for money can be entered against them.

Some states take service of process one step further and allow service on the defendant without personal delivery. For example, if the defendant is not at home or at their workplace after a reasonable number of attempts, the lawsuit document can be handed to an adult at the residence or handed to the person in charge at a business, then another copy mailed to that address.  This method is known as “substitute service” in California state court. When properly handled, it can be a valid way to notify the defendant of a lawsuit. Errors happen frequently, however, leaving people with no notice of the lawsuit.

Defendants usually miss the deadline to file the answer, either because they received no notice or they did not understand the deadline. If the defendant learns of a lawsuit, but did not understand how quickly their response was due in court, a default judgment can be obtained after that deadline expires. Promptly contacting an experienced lawyer, such as a consumer lawyer who is listed on, would eliminate this mistake.

If the defendant receive no notice of the lawsuit, then of course deadlines will be missed, because the defendant had no knowledge of the case. Eventually, a default judgment is entered in the case, which can force the defendant to pay money from his or her wages, bank accounts, and other property. However, the law has a “reset button” known as the motion to set aside. If the defendant promptly files a motion to set aside the default and default judgment soon after learning of the judgment, then the court can allow the defendant to file the answer or other response in the case. Once an answer is filed, the judgment is canceled. The court can later approve a money judgment, dismiss the case, or the parties can agree to settle.

Until the court approves setting aside the default and default judgment, the defendant has no defenses to the lawsuit. Thus, even if the balance is incorrect, the defendant cannot get it reduced, except by paying it down. Even if the lawsuit was filed too late, the defendant cannot object.  This is how good defenses are spoiled by delays.  Without any defenses, a judge is more likely to enter a judgment for money for the debt collector.

Some defenses are not waived by delays or failure to set aside a default. For example, if the debt was opened without authorization by the defendant or a person used the account without authorization, such as identity theft, then that offense (known as a claim or cause of action) may be filed as a separate case. Then, if the debtor (the consumer defendant) wins, the judgment can be cancelled, depending on state law, and credit reporting of the account and judgment may also stop if it was identity theft.

There are also many laws that can provide protection for a consumer or small business person against harassing conduct by debt collection agencies.  Most importantly, the federal Fair Debt Collection Practices Act (FDCPA) makes it illegal for a collection agency to harass consumers and others. There are also state laws, such as the California Rosenthal Fair Debt Collection Practices Act, which also cover harassment by creditors. The FDCPA has a time limitation of only one year from the date of the harassment (or date of discovery, whichever is later), which makes it important to hire an experienced attorney quickly, well before a year expires.

There are other laws, as well, that cover harassment. For instance, if the consumer receives calls on his or her cell phone, which number was not given to the creditor or debt collector, then this may violate the Telephone Consumer Protection Act (TCPA) which has a longer statutory period of up to four years.

If the consumer timely asserts his or her rights against a collection lawsuit, then the debt collection case may be dismissed or settled for a lower amount. When consumers and their lawyers are able to file a case for harassment under the FDCPA, TCPA, or other laws, that may force the debt collector to pay a money settlement to avoid trial.

Finally, if there has been no recent harassment and a default judgment is too old to set aside, there is one last defense that a consumer can consider to stop a very painful wage garnishment or other judgment enforcement: bankruptcy. Not everyone qualifies for a discharge (known as Chapter 7), but only an experienced consumer attorney or bankruptcy attorney can advise on who qualifies and if bankruptcy should be explored.  If the consumer makes too much money or has too many assets for a bankruptcy discharge, there are other bankruptcy chapters that an experienced bankruptcy attorney should explain.

Written by Robert Stempler, California Consumer Attorney and President of Consumer Law Office of Robert Stempler, APC. The firm has published several short videos, articles, and a blog on debt collection lawsuits at .