Defense against Junk Debt Collectors in New Jersey
A brief review of issues that commonly come up in New Jersey Debt Collection cases in which Junk Debt Buyers are involved. Keep in mind this is designed for informational purposes ONLY, it is INSUFFICIENT to teach a pro se litigant how to litigate their case. Note: this is applicable only to NJ.
Overview of the Junk Debt buying industryYou may have gotten sued by a company claiming they have purchased some long forgotten debt. This is likely a company with some strange name with which you never had any dealings. Junk Debt Buyers, sometimes called 'third party debt buyers', as a general rule buy individual consumer debts for a few cents on the dollar and then sue the debtor for the entire amount, taking the difference as a windfall profit.
What to do if you are sued by a Junk Debt Buyer in New JerseyThe first thing is what NOT to do: YOU SHOULD NEVER IGNORE THE LAWSUIT. If you ignore the lawsuit, and by ignore I mean if you do not respond to the complaint, either personally or through an attorney, you will almost certainly get a judgement against you. Once a debt collector has a judgement your outcomes become MUCH worse, and you will likely get either a wage garnishment or bank levy. Rarely a debt collector may go after your real property.
The first step you need to take in the furtherance of your case is to understand the important dates: when do you need to file an answer, or in small claims court when do you need to appear. It would be wise to contact the county superior court in which you are being sued if you have any question as to these dates.
Next you should contact an attorney. Whether you ultimately hire this attorney is another matter entirely, but you need to discuss your case personally with someone. If economically feasible I strongly recommend hiring counsel. You may qualify for free legal representation by Legal Services of New Jersey, it may be worth it to contact your county legal services office to see if you qualify.
Even if you can't hire an attorney (which I don't recommend) do yourself a favor an answer the complaint. Please take great care in answering the complaint. If you do it incorrectly you could set yourself up to lose your case. HOWEVER answering the complaint is ALWAYS better than failing to file an answer.
What if the time to answer the complaint has expired and you failed to do so?You might be reading the previous section and be getting depressed that you didn't answer the complaint. This is an EXTREMELY common problem. You can still likely improve your situation though, but action needs to be taken and this action is VERY time sensitive.
A motion to vacate default judgement can be filed. This motion can be on any one of several basis, but most commonly this is accomplished through a 2 part test that must be shown by the party that files the motion: 1) Excusable Neglect and 2) Meritorious Defense.
1) Excusable Neglect - whenever one fails to answer a complaint, this failure is inherently neglectful. However the court recognizes that sometimes the extraordinary circumstances of life may be the cause of this neglect. If one can show, that one's failure to answer the complaint was excusable due to circumstances of the Defendant's life at the time, then the first part of this test has been completed.
2) Meritorious Defense - Generally its not on the Defendant to prove one's lack of guilt or liability. However in this kind of motion it is incumbent upon the Defendant to present sufficient facts that could constitute a defense. Basically the court doesn't want to reopen a case if it is inevitable the Defendant will be found liable for the same judgement.
This 2 part test is the most common basis to vacate default judgement. You should be aware that these motions must be filed within 1 year.
The second most common basis is a showing that the Defendant was not served with the complaint. This is typically more of a factual determination and less of a legal argument. It does require a showing more than a defendant saying "I didn't get it" - rather I generally advise Defendants to get a copy of all the service documents from the court, and then get various records of your own showing where you were living at the time bank, credit card statements, utilities - all work nicely in this regard. There is no specific time limit for a motion to vacate on this basis, it must just be filed within a "reasonable time".
There are several other basis for making this motion, with various time limits, but these are all far less common.
Please note: these motions are more complex and difficult than they sound, you should consider retaining counsel.
DiscoveryIf you have answered the complaint, you (or your counsel) will likely receive interrogatories and request for admissions. This is part of the discovery process in New Jersey. These are questions you have to answer. If you don't a motion may be filed against you. Conversely, you have the right to send your own interrogatories to Plaintiff's counsel. These can be specific questions and requests for copies of the documents they intend to produce in court. If they fail to answer, you can make a motion against the Plaintiff.
Motion for Summary JudgementThe idea of a trial is that there are facts between the Plaintiff and Defendant in dispute and a trial must be had in order to determine who is right and who is wrong.
A motion for summary judgement basically says that there are no factual issues in dispute and that the court can therefore rule on a case without the need for a trial. The Junk Debt Buying industry and their attorneys file these motions quite often. They file these motions even when people say that they don't owe the debt or don't owe the amount on the debt. Their arguments vary but generally run along the idea that any factual disputes are not legitimate. These motions need to be taken seriously. If you lose it will end your case and judgment will be found against you. Like all things in court you have limited time to respond to such a motion. If you haven't done so already, I strongly recommend hiring counsel.
MediationThere may or may not be a mediation. A mediation is where the two parties sit down, with some neutral third party and try to reach some sort of settlement.
Settlement can be a useful tool, it has one very specific benefit and one very specific drawback.
The benefit: you will control your own outcome and eliminate the inherent risk of trial.
The drawback: if you settle you will end up paying some money.
Settlements can be based around a time payment, or only a partial payment or some mixture of the two. Do not go into a settlement negotiation expecting they will simply drop the case. However if you are will to negotiate in good faith and be reasonable, a mediation can be an excellent opportunity to get a decent outcome.
ArbitrationAn arbitration may be called. This is basically a mini trial with very few rules. Basically you and opposing counsel go into a room with a third party, generally a lawyer who is not a judge. The arbitrator will ask for a breakdown of the facts of the case. They will then ask you for your defenses. I strongly recommend presenting SOME sort of defense. The arbitrator will then make a ruling.
Typically Defendants in junk debt buyer cases lose these proceedings. The reason is just that the forum favors the junk debt buyer as none of the rules of evidence or court apply (unless the arbitrator wants them to, which they never do). If you lose they will award the Plaintiff a certain amount of money. This is not permanent. You can appeal this (for a fee). These appeals should be made immediately as you have limited time to appeal. If you fail to appeal or fail to do so in time, then this arbitration award will transform into a permanent judgement.
If you do appeal the award is completely eliminated and the matter will be scheduled for trial.
TrialTrials should not be done by pro se litigants, please get an attorney.
At trial there are 3 elements that must be proven by a junk debt buyer:
1) Contract - the existence of an original contract between you and the original creditor.
2) Damages - that you accrued a debt that you then failed to pay and the interest rate on that debt.
3) Assignment - that the debt has been sold to the junk debt buyer.
You can also litigate any affirmative defenses you may have (Statute of limitations for instance).
These trials are winnable. Every case is different but in my experience the best strategy is to try to point out all the materials that the Plaintiff DOESN'T have or interfere with their ability to enter those documents into evidence. The latter of these two techniques requires a comprehensive knowledge of the Rules of Evidence. It is neither simple nor quick to learn, as such you would be well served by hiring counsel. If you cannot do so, either consider making a settlement or study as much as you can about Hearsay, specifically the Business records exception to the general prohibition against hearsay.