Need Help With Pro Bono Debt Collection Defense

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Latest post 04-12-2011 11:07 PM by Taxagent. 8 replies.
  • 04-12-2011 3:32 PM

    Need Help With Pro Bono Debt Collection Defense

    I have taken on a pro bono case in which I need assistance or direction from an experienced collections attorney. Client had credit card debt. Stuck head in sand and never showed in court. Atty for collection co requested depo re property, and cl no showed and failed to show at court for motion to compel so county judge said client failed to comply with court order so signed order saying they could arrest, had to pay collection atty 1K for atty fees, etc. Then she brought case to me. Now I have contacted the atty and they have set a depo to view her finances, etc. Essentially this is collection agencies way to create a debtor's prison. How can I defend this now after the fact? I think I could have gotten her free from the debt had it come earlier cause could have been out of the SOL. She is self employed hairdresser who makes around 10 to 12k year. This is old card debt in betwn 2003 and 2005. I am asking them to tell me who is original creditor, when last payment on acct, when they filed suit originally. Do they have to give to me now? What can I do for her....super clueless and don't have time to learn all from scratch. Would appreciate a call.

  • 04-12-2011 3:50 PM In reply to

    • Kivi
      Consumer
    • Top 25 Contributor
    • Joined on 01-01-2005
    • CA
    • Posts 6,100

    Re: Need Help With Pro Bono Debt Collection Defense

    If you are not a licensed attorney in the relevent state, I would expect the attorney for the other side to disqualify you before the proceedings begin. It does not matter that you are working "pro bono". Your post states that you are a consumer.

    It sounds as if what will occur is a debtor's examination to determine if she has any assets that can be used to satisfy the debt/court judgment.

    The time to have raised the issue of who owns the debt, whether it was barred by a SOL, etc., was when she was first sued, not now. The judgment ilikely was granted by default quite some time ago. Unless you can prove faulty service and get the jdugment vacated, your client is stuck with that aspect of it. From what you have described, your client was aware of the law suit and court summons and blew it off.

    If your client has an income and lives in a state that permits wage garnishments, then she is at risk of receiving one unless she is low income as defined in Federal statute. She also is vulnerable to a bank levy, assuming she does have a bank account. TX does not permit wage garnishments, but if she has money in a bank account, she may want to close it. She should cash her paychecks at one of those check cashing places. The creditor probably is going to have a difficult time proving she has tip income in any significant amount.

    Your client probably has the option of discharging this debt in bankruptcy.

    If she chose to ignore a court order to appear for a prior debtor's examination, then she should have been  prepared to suffer the consequences. Court orders are not suggestions. Blowing that one off was a "bad move" on her part. However, judges are not  eager to fill jails with debtors who probably could have filed for bankruptcy, if they had only been smart enough to realize it.

    I suggest that she appear. If she has limited income and no assets, there probably is not much that this debtor's examination will do for this creditor.

    However, judgments often are valid for many years, sometimes as long as ten or fifteen and in many states are renewable for another ten years or so.  Her circumstances could change and the judgment could come back to bite her in the rear end as an incovenient time.

    She still might want to file for bankruptcy. Depends upon how much she owes, whether she has other bad debts, etc.

  • 04-12-2011 4:00 PM In reply to

    Re: Need Help With Pro Bono Debt Collection Defense

    I am a licensed attorney in the state (TX) --- I don't know why that says consumer....did it many years ago likely in a hurry!  Just need suggestions re this depo for examination of financial documents.  Because of the contempt order for failure to go to the original depo for collection of judgment, she has finally asked someone for help.  She is not that bright and chose to stick her head in sand before....of course not good judgment.  Need to know if there are limitations on what they can demand she pay now.

  • 04-12-2011 4:01 PM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,404

    Re: Need Help With Pro Bono Debt Collection Defense

    Its a long shot--but many a small claims "notice" is not properly served --and if a step was missed at beginning that might be grounds to vacate the whole thing.



  • 04-12-2011 5:16 PM In reply to

    Re: Need Help With Pro Bono Debt Collection Defense

    Looks like you are an attorney who specializes in social security benefits and disability which explains your lack of knowledge about debt collection.

    I'll answer your last question first:

    LyndaLegal:
    Need to know if there are limitations on what they can demand she pay now.

    No.

    Assuming that there has already been a judgment awarded to the creditor, your client is obliged to pay the amount of the judgment, pre-judgment interest on the defaulted balance, court costs, post-judgment interest, and attorney fees for the original lawsuit (credit card contracts generally have bi-lateral attorney fee provisions), and attorney fees and court costs generated by the enforcement of the judgment.

    In other words, her original defaulted balance could have grown by tenfold by now.

    Judgments in TX are good for 10 years (possibly renewable) so this isn't going away any time soon.

    LyndaLegal:
    Just need suggestions re this depo for examination of financial documents. 

    There's really nothing to suggest. Your client is going to have to go in and answer every question about her finances and answer them truthfully.

    Your client's only real advantage is that wage garnishment is prohibited by the TX constitution. And if she has no money in the bank, no earnings to garnish, and no non-exempt property to attach, then (other than the contempt citation) she probably is judgment proof. And going in for the debtor examination will probably cure the contempt citation.

    There are a couple of alternatives open to her. Bankruptcy is one of them. But if she can get cash from relatives or friends she can offer a lump sum settlement for a discounted amount or see if the creditor will agree to leave her alone in exchange for a payment plan.

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 04-12-2011 8:14 PM In reply to

    Re: Need Help With Pro Bono Debt Collection Defense

    It is HIGHLY unlikely you will find someone here who is appropriate to assist. Why did you take on a case you are not qualified to handle? Do you realize the issues that can cause with your malpractice insurance?

    You need to talk to the local bar about a referral to a more experienced attorney ASAP.

  • 04-12-2011 9:32 PM In reply to

    Re: Need Help With Pro Bono Debt Collection Defense

    Lynn is right. You are running a big risk by handling this.

    If your client has no money for an attorney with proper experience, see if you can trade pro bono work with a colleague.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 04-12-2011 10:14 PM In reply to

    Re: Need Help With Pro Bono Debt Collection Defense

    That is simply not true!  I have had some excellent attorneys with the experience to step up.  This is really after the fact.  The poor cannot always afford representation and I am better than her going alone!  If bankruptcy is an option she should explore then I will forward her on to legal aid for that.  If at this point she has no options except to do a payment arrangement or bankruptcy AND she can do a reasonable payment arrangment then I can help her with that.  If this was a case that might have been cured before her contempt of court for not showing up at the depo re financials for recovery of judgment then I would send her on to legal aid but it is not.  I know when I cannot handle something and would not risk much but that is why I am asking peers for help in this case.  Thanks for your input though, and I would not risk malpractice.  Benn licensed long enough to know that.

  • 04-12-2011 11:07 PM In reply to

    Re: Need Help With Pro Bono Debt Collection Defense

    LyndaLegal:
    Do they have to give to me now? What can I do for her....super clueless and don't have time to learn all from scratch. Would appreciate a call.

    They have a judgment already. So now they no longer have to prove the debt to the debtor or the court. SOL is an affirmative defense that the defendant must raise to succeed. Thus, if you want to try the case on the merits, you'd need to first get the default set aside. If she was properly served at the time of the original lawsuit, she likely has no basis for seeking to set aside the default now. Even if she did have a basis to get it set aside, she should have raised it as soon as she was aware of the judgment. Waiting definitely does not work in her interest. Bottom line is that you can try, but it's likely that it's too late for her to contest the debt. By ignoring the collection efforts until this stage, she put her herself in this situation.

    If she cannot get the judgment set aside, she may need to consider bankruptcy if she doesn't want to deal with the creditor attaching whatever non-exempt assets and income she has.

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